In the business world, having a solid customer base is crucial for survival. For most business owners, their customer list is the lifeblood of their operations. This list of previously satisfied customers is essential for repeat business and positive referrals. But what happens when a prior employee steals your clients? Do you have any recourse? A Florida Business Lawyer from Parrish & Goodman, Attorneys at Law, examines this dilemma.
Employees, Customers, and Risk
Many businesses require a number of employees to interact with customers and meet their needs. The business owner is simply too busy to service every customer individually. Your employees are a valuable resource that can keep customers satisfied and returning. They essentially become the face of your company. However, this employee-customer relationship carries a risk.
A savvy employee can work for a company for years, learn the business, build solid customer relationships, and then leave the company to join a competitor or start their own company. Satisfied customers who attribute their quality service experiences to the prior employee may follow them and take their dollars to the new company to continue their relationship.
Your invaluable network of satisfied customers can be threatened and reduced considerably.
Florida Law, Non-Compete Agreements, and Trade Secrets
Florida law has generally upheld non-compete agreements until recently. The Federal Trade Commission (FTC) approved a new rule on April 23, 2024, that bans non-compete agreements for most workers across the United States. The new provision applies to employees, independent contractors, interns, and volunteers and goes into effect 120 days after publication in the Federal Register. There are very few exceptions. Florida businesses must reevaluate their employee contracts to adapt to this new shift.
Moreover, Florida employers must use clear and conspicuous written communication to notify employees about the unenforceability of existing non-compete agreements by the effective date. If you have non-compete agreements with employees, consult with our business attorneys to get help modifying them.
However, even if non-compete agreements are now void, you may still have a viable means to pursue damages from a former employee who stole your customer list. Florida’s Uniform Trade Secrets Act (FUTSA) mirrors the federal Uniform Trade Secrets Act and defines trade secrets as follows:
“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process that:
- Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
- It is the subject of reasonable efforts to maintain its secrecy under the circumstances.
Florida’s Second District Court of Appeals established the criteria for allowing customer lists to be declared a trade secret in East v. Aqua Gaming, 805 So.2d 932 (Fla. 2d DCA 2001). Pursuing damages against your prior employee may be possible if your customer list meets these criteria:
- Your customer list “was the product of great expense and effort, that it included information that was confidential and not available from public sources, and that it was distilled from larger lists of potential customers into a list of viable customers for [a] unique business.”
- You took appropriate measures to protect your customer list and keep it a secret.
- Your prior employee used this customer list to steal customers and cause you financial harm.
This course of action is still possible even after the FTC’s new rule banning non-compete agreements goes into effect. However, you need a knowledgeable business litigation attorney to help you build a solid case.
Experienced Florida Business Lawyers Help with Prior Employee Issues
Parrish & Goodman, Attorneys at Law, with offices in Naples and Ft. Myers, are experienced Florida business lawyers who can review your case and offer seasoned guidance. Our business litigation experts can determine if your customer list qualifies as a trade secret and help you pursue damages because your former employee used your customer list to divert customers away from your company, causing financial harm.
We can also review the specifics of your situation and recommend other courses of action. Contact us today to schedule a free consultation and find out more.
