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Will your old boss sue you for starting your new business?

Okay, so you have a great idea for your new business, you've got a business plan, plenty of operating capital and a strong business climate. You're almost ready to cut the cord on that steady income from your employer and to live your dream. Ready to  blow off that boss who has been holding you back? Maybe take a moment or two before you slam the door on your way out.

If you want to keep the past in the past, you may want to take a few steps to be sure you don't violate any contracts with that old employer.

Get a good attorney and think about this:

Non-Compete Agreements and Non-Competition Clauses

If your new business is in the same line as your employer's business, you can bet they will be combing your contracts for any language in there to convince you to compete with someone else other than them. You likely know a lot about them fro the work you have done with them.

In Maryland and the District of Columbia, a well written non-competition clause in your contract with your employer can contain language that restricts how you might compete with them. That is sometimes called a non-compete agreement and the language in an employment contract might be called a non-compete clause or a non-competition clause.

A non-compete clause might limit you by distance: no new bakery within 10 miles of any bakery of theirs.

A non-competition clause might limit you by area: no practicing accounting in Montgomery County, Maryland.

A non-compete agreement might restrict you by customers: no contacting the current employer's clients or those clients of the employer you worked with.

A non-competition agreement might restrict you by types of customers: no contacting Honda dealers in the Metro area.

However termed, these clauses or agreements might restrict you by time: no competition for two years.

Maryland and D.C. courts commonly look to how reasonable the restrictions are in reference to the nature of your employer's business and your skills and training. 

Before you walk out the door, you may want to review your contracts for such non-competition clauses or non-compete clauses. 

Maybe there will be no limitiation. Maybe you can work with the limitation. Maybe you will find that the clause seems to broad. Whether a clause is too broad or not, your emloyer may be willing to negotiate that clause with you. Maybe there will need to be litigation to have a court decide the issue.

Non-Disclosure Agreements and Non-Disclosure Clauses

Every employer has business data that they would not want to have provided to their competitors. If your employer thinks they have confidential data or if it has been involved with a former employee who has used their information in a way they did not like, they and/or their attorneys may have come up with a non-disclosure agreement or non-disclosure clause.

In starting your new business, you should check all your employment agreements for such clauses.

Your non-competitition clause may bar you from keeping company or customer information secret "forever" or for years past any reasonable limit in a non-competition agreement.

The non-disclosure clause might bar you from providing certain information to third parties, like others in your new company.

The non-disclosure agreement might bar you even from using any of the data yourself.

As with non-competition agreements, a review of your employment agreements might show you have nothing to worry about, might show you have a lot to worry about or might show you need som ehelp navigating their language.

Maryland Trade Secrets Act

Even if you have signed no non-competition agreement or non-disclosure agreement with your employer, state statutes may still bind you to a course of conduct.

Maryland has a Trade Secrets Act that can bind you not to use or disclose certain information -- your employer's "trade secrets" as definded by the statute -- even if you have not signed any kind of employment agreement.

It would be a safer course to consult a business attorney before your new business -- and all that start up capital -- make their way to certer stage in a Maryland Circuit Court or the District of Columbia Superior Court.

By Dan Willard

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Daniel S. Willard, P.C.
9401 Rockville Pike
Bethesda, MD 20814

Phone: 301-304-4972
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