Mark Pestronk
Q: Our agency has been slammed with leisure bookings from clients we haven’t heard from since the pandemic. I would like to hire some experienced agents to meet this pent-up demand, but several of those I have interviewed say that they may have existing employment contracts that prohibit them from working for us. Since I am certainly afraid of being sued by a competitor, should I take the prospect’s word for what the contracts provide and decline to hire them, or should I require them to show me the employment contracts before I proceed?
A: You need to review the contracts and then have your attorney do so. Most of the time, these contracts do not actually prohibit the conduct that the prospects think they do.
Complete prohibitions on working for a competitor are quite unusual in employment contracts for travel advisors. Usually, they prohibit soliciting or handling clients that they handled while working for the competitor. They do not prohibit the employee from working for you if they handle only your agency’s own clients.
Sometimes, these contracts prohibit the ex-employee from using “trade secrets” that the employee learned during the course of his employment. However, it is tough to prove what a travel agency’s trade secrets are, and at least one court has ruled that client names are not trade secrets.
In a small minority of cases, the contracts do prohibit travel advisors from working for any other travel agencies within the same geographic area for a fixed period of months or years. In a growing number of states, these contracts are unenforceable, and in the rest of the states, they must be reasonable in time, geographic area and scope so that the employee is not deprived of a way to earn a living.
In another group of cases that I have found, the restrictions appear in an employee manual or handbook. In most cases, such provisions cannot be enforced, as they are not contractually binding on the employee.
Finally, in a very small number of cases, it turns out that the employee never signed the employment contract, so your competitor will have a very hard time proving that the employee agreed to be bound by it.
So the lesson here is not to take a prospect’s word for what their employment contract says. See for yourself and get your attorney’s opinion as to its scope and enforceability. You may be pleasantly surprised.
If it turns out that there are no meaningful restrictions in place, what can an ex-employee do? The general rule is that an ex-employee is free to solicit and secure any and all clients. This freedom is central to our free-enterprise system, and courts in every state have recognized the general rule.
Ex-employees may legally solicit the clients by any means they choose, including phone calls, emails, texts, letters or ads. For work in progress, such as cruises and tours under deposit, different rules apply, and I will discuss them in a future column.
