Starting a new competing business with my current employer

Warriors88

New Member
Jurisdiction
California
Hello!

I'm currently in the process of starting my own business in CA and need some legal advice.

I've worked for this current company in nightlife for over 8 years, as well as worked in nightlife for years prior to that. I am the top guy in the business under the owner - we provide promotions/marketing/management for various nightclubs in the city.

I am currently incredibly valuable for this business as I plan and execute all the events, maintain and build all relationships with partner venues, bring on and train new staff, and pretty much run our entire promotional business myself while my boss takes nearly all of the revenue for himself leaving minimal leftover for myself and next to nothing for our staff.

The majority of our promoters are 1099 independent contractors and our event managers work part time (less than 15 hours per week) managing events and are paid hourly.

Given I bring all the value to the business, hold all the relationships now with the venues/"clients", and he has made it clear he does not want me to become a partner in the business I have decided to start my own nightlife company.

The majority of the staff want to leave with me to start this new venture, and several of the venues have already told me they would prefer to work with me if I were to start my own.

I am planning on telling him I am leaving to start my own business in 10 days. One small business lawyer told me he could potentially sue me if I were to work with any of his past "clients" as i would be violating the Misappropriation of Trade Secrets by working with these venues. There are no signed contracts with the venues currently, just emails describing what our pay will be given our production on the events. They are also public knowledge as the biggest venues in the city and therefore aren't technically "trade secrets" and I worked in nightlife for years prior to starting with my employer and could have easily found these clients myself. I am not taking any email lists from the company and there aren't top secret trade secrets in promotions that I hadn't already learned myself working in nightlife prior to this business.

My questions are:

  1. Is there anything I can get in trouble for if the majority of the promoters/staff want to leave to work with me when I start my new business (the non-1099 employees only signed an agreement acknowledging they are 1099 employees and nothing regarding non-competes which are also illegal in california)

  2. If the venues decide to work with me instead of my employers company once I start my new business is there anything wrong with that legally?

  3. Do the 1099 or part time employees need to give him notice before leaving?

  4. If I talked with the 1099/part time employees about my plans to start the new business while still employed with current employer is there anything wrong with that?
Appreciate this so much ! thank you
 
My questions are:

  1. Is there anything I can get in trouble for if the majority of the promoters/staff want to leave to work with me when I start my new business (the non-1099 employees only signed an agreement acknowledging they are 1099 employees and nothing regarding non-competes which are also illegal in california)

  2. If the venues decide to work with me instead of my employers company once I start my new business is there anything wrong with that legally?

  3. Do the 1099 or part time employees need to give him notice before leaving?

  4. If I talked with the 1099/part time employees about my plans to start the new business while still employed with current employer is there anything wrong with that?

Before you reveal ANY of your plans to your current employer, retain the services of an attorney.

If you want to avoid COSTLY litigation, don't say or do anything about leaving until you seek REAL legal advice from an attorney in the county where you reside.

You shouldn't say ANYTHING to other employees, or current clients.

If you still feel froggy and leap, you will reap some of the most dire consequences, most of which you can't imagine.

Don't blab, don't quit, do NOTHING unless advised by YOUR legal counsel.
 
I'm currently in the process of starting my own business in CA and need some legal advice.

Good idea. Please review the "Legal Disclaimer" at the bottom of every page at this site. This is a good site for general information about the law, but you need to retain the services of an attorney to obtain legal advice.

One small business lawyer told me he could potentially sue me if I were to work with any of his past "clients" as i would be violating the Misappropriation of Trade Secrets by working with these venues.

Here's a link to the California Uniform Trade Secrets Act. I suggest you review it and ask particular questions if you have concerns.

As for the questions you asked:

1. That's an awfully broad and vague question. No one here can intelligently tell you that there's no possibility.

2. In the abstract, no, but we don't have all of the relevant facts.

3. No employee is legally required to give notice. Independent contractors may need to give notice if required by their contracts.

4. See #1.

Litigation can be cripplingly costly, even if you win. Consulting with a lawyer now can be viewed as litigation prevention.
 
If anyone in CA has any expertise on this please let me know

I'm sure lots of people in CA have expertise on this issue. They are called lawyers.

You've already learned that you can potentially be sued by taking business away from your current employer. And you probably will be sued once money starts flowing away from your current employer.

I suggest, instead of just talking to a lawyer, you pay one to provide a comprehensive review of your business relationship and intentions and advise of the potential consequences.

Defending a lawsuit, even if you are in the right, could cost you tens of thousands of dollars while you are unemployed.
 
The best advice here is what Army Judge told you: "Before you reveal ANY of your plans to your current employer, retain the services of an attorney." There are a number of considerations here, including possible interference with the contractual relations of your employer and possible noncompete issues, too. You need to go over all that with a lawyer given the exact details of your situation to see what risks you run with your proposed business idea.
 
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