Breach of contract lawsuit for violating noncompete agreement

It is not unusual for employment contracts in Maryland and elsewhere to include noncomplete clauses. An employee who signs such a contract agrees not to work for the employer’s competitor or to establish a similar business within a certain amount of time after leaving the job. This is to protect the company’s trade secrets among other reasons. Employees who commit breach of contract may cause financial loss to their former employers.

One global company headquartered in another state is rapidly losing revenue apparently due to the breach of a noncompete agreement by an employee who was still working for the company, Ecolab, Inc. The company provides environmentally friendly cleaning supplies and specialized services to commercial industries. A lawsuit filed by Ecolab claims a sales manager with access to trade secrets and steady contact with customers formed his own business, providing commercial hygiene to Ecolab customers.

Ecolab claims it became aware of the alleged breach soon after the sales manager resigned. Loyal customers suddenly began calling to cancel their services using an explanation that seemed familiar and rehearsed. The customers claimed they would be performing their own hygiene services despite the special skills and costly equipment required. Soon Ecolab discovered a new company, formed by their former employee, was providing the service.

Ecolab estimates its losses at $100,000 a year. The company issued a cease and desist demand, but the former employee did not respond. Ecolab is seeking damages for breach of contract and unfair competition, among other allegations. Maryland business owners may benefit from including a similar contract with their new hires in case such a misappropriation places their businesses at risk.

Source: argusleader.com, “Ecolab accuses former South Dakota employee of pilfering customers“, Jonathan Ellis, April 23, 2018