So you're an entrepreneur, you're probably on double duty right now. You probably have a day job and working on your startup venture in your spare time. But at some point as your business develops and grows, you have to make the tough decision of leaving your day job so that you can focus on your startup venture full-time. In this lesson, we're going to talk about some of the legal complications or legal issues you should have in mind as you make the decision to leave your job. We'll talk about restrictions that you have right now while you're still employed. Then we'll talk about the process of soliciting your co-workers after you leave your job. There's two big issues that you want to keep in mind when leaving, including non-compete obligations as well as trade secrets. And then finally, we'll give a couple of best practices for leaving your current job. Let's start with restrictions that you have while you're still employed. It's a tough position to be in when you have your day job, you have obligations to your current employer. But you're also focusing on your new venture and how to get your business off the ground. And oftentimes, your loyalties may naturally be split, but the legal consequences for you allowing that kind of split loyalty to get out of hand. So let's talk about, how do we navigate that. First of all, while you're still employed, your obligations to your current employer are paramount. The time that's allocated for your current employment are your employer's time. The resources that you're provided, whether you have a laptop or facilities or other things, that belong to the employer. You can't use those resources for your private venture. The time when you're on the clock, these are times that is allocated for your employer's business. You can't work on your startup venture while you're on your employers time. They're prohibitions against that, so keep that in mind. You want to be very clear that while you're working for your employer, you're using your employer's facilities and resources and equipment, that's for your employer's business. And only after your timing is up, you're off your day job and you're using separate equipment, separate facilities, can you work on your startup venture. Moonlighting is a common term, that's where you are. In addition to your day job, you also have another job aside. You want to make sure you read your current employer's, employee handbook or requirements or agreements that you have as an employee, because there may be prohibitions against moonlighting. And if that's the case, then you're in a tough position in terms of running a separate business simultaneous with working for this employer. Oftentimes, employers will allow moonlighting as long as the separate job doesn't compete with the employer's business. So think about the type of business venture that you have, and if that business venture competes with your current employer. That's a red flag for you in terms of whether to be able to do both at the same time. Another big important issue is the type of employee you are with your employer. If you're high level, high ranking, key employee to the employer, it makes it even harder for you to separate the time and resources that's required. Oftentimes with employers, particularly salaried employees, if you are a very key employee or high ranking employee. The time or the resources that belong to your employer are oftentimes undefined, right? There's no nine to five, right? You're kind of always on for your employer, so it's hard to find the time that you can clearly allocate for your startup venture. So keep that in mind, and if you have any questions about whether your position as an employee with your current employer prohibits you or in otherwise, inhibits you from working on your startup venture. Please seek the advice of a council to help you think through what obligations you may still have or whether there is a way for you to carve out the time for your current venture. But if you're going to make the decision to leave your employer, you should think about some of the things around your co-workers. Soliciting co-workers is a common thing, right? These are people who you've been in the trenches with. You guys work on similar material, and because you enjoy working with them, you may want to bring them in on your new venture. Soliciting co-workers is, it's a very sensitive topic. It's a very sensitive issue. So to the extent you can avoid doing this during the process of leaving your current job, you should do it, you should just avoid it, If you can. There's usually an agreement in place not to use your confidential information from your current employer in connection with your new business. And failure to do that can lead to legal consequences. It can also lead to tort claims like civil liability. If your co-workers have an employee contract with your employer and you're soliciting your co-workers. There may be tort claims around interference with contractual relations, right? Your co-worker has a contractual relation relationship with your employer. And you may be interfering with that contractual relationship by trying to lure your co-workers over to your new venture. Because it's so many legal landmines involved with the idea of soliciting coworkers, you may want to stay away from that. And later in this lesson, we'll talk about some best practices for ways to work with co-workers in connection with your new business. After leaving your employer, so you've made the decision, hey, I'm going to work on my business full-time. I'm going to get my separate facilities and here's what I'm going to do with my new venture. There are a couple of things that you want to make sure that you are not only aware of, but that you put into practice with respect to your new business. The first is non-compete agreements. Oftentimes, employers have in their employee agreements, some type of non-compete clause or some type of non-compete agreement. This is designed to ensure that you aren't going to compete with your current employer. The non-compete agreements can't be included in another agreement. They must be either separate, they must be a part of or a completely separate agreement. They have to be supported by its own separate consideration. Meaning that it must be its own separate contract in order for it to be a legitimate and validly enforceable non-compete agreement. And a non-compete agreement has to further a legitimate interest of an employer. So an employer can't just put a non-compete clause in your employee agreement, if there is no legitimate reason to do so. And to the extent, if there is a legitimate reason, the non-compete must be very limited. It must be limited in scope, limited to one year or two years after the termination of your employment. It must be limited in geography. You can't compete with the employer within 25 miles, or within 50 miles of where your current employer works. So if you're subject to a non-compete agreement from your employer. One, you want to follow that agreement, you don't want to breach the agreement. But also you want to ensure that as you are entering into non-compete agreements, you're thinking about the proper limitations on the non-compete. And also after you leave your employer, you're still bound by the obligations to protect your former employers confidential information. You can't use confidential information that you learn at your now former employer, in connection with your new business. You have to keep their trade secrets confidential. You can't disclose those and properly, you can't use them without authorization. And in fact doing so could lead to criminal liability meaning you can go to jail for this. So you want to be very careful about the confidential information that you acquired at your former employer. And put mechanisms in place so that you, or to the extent co-workers come over with you, that no one in connection with your business is improperly using confidential information from your former employer. So let's talk about summary and best practices. You should be open and honest with your current employer. If you're deciding to leave, to go start your venture full-time, you should just disclose that. Let your current employer know that's what you're up to. And make sure that your employer understands that you don't intend to use their confidential information. You intend to abide by whatever non-cmpetes may be in place. To the extent there is no non-compete, you intend to run your business full-time, just be open and honest with your employer. What this does is, it leaves the employer with the impression that you're being straight up, right? That you're not engaging in any type of bad faith activity. And by setting that kind of tone, it mitigates the chances that your employer may go after you for stealing trade secrets or for breaching confidentiality. So that open and honest relationship, that open and honest communication with him. Your employer can save you a lot of headaches later on, once you are focusing on your new business full-time. And then in terms of your co-workers. Because this is something that comes up oftentimes when young entrepreneurs leave their job to work on their venture full-time. The best way to handle this is to just send a note to your co-workers, letting them know that you're leaving the company. And that you're going to work on this new venture full-time. And then leave your contact information, that's it. So if the co-worker decides that they want to talk to you about your new venture. Or eventually come over to your new venture, they have the ability now to contact you. They have your contact information, and as long as they initiate that contact. Then all of the concerns around solicitation, interference with contractual relations, all those concerns go away if the contact is initiated by your former co-workers. So the best practice there is you just let them know what you're going to be working on and where you're headed, and leave your contact information. And then leave it up to them to initiate any type of contact. So I hope this helps you, as you're thinking through the very difficult decision to leave your job to work on your venture full-time.
