Nursing Agency: Nurse Can Quit, Start Own - Unfair Competition Case Thrown Out
Legal Eagle Eye Newsletter for the Nursing Profession
January 1999
Quick Summary: The law permits a nurse to use his or her own ability to her own personal advantage.
In defining unfair competition, the courts have to balance the employee’s right to individual freedom against the employer’s right to protection of business assets, property and trade secrets.
As a general rule, if the employee has not signed a non-competition agreement, the employee has the freedom to quit and start a competing business or go to work for a competitor.
However, the employer’s business agreement forms for clients and employees, pricing sheets and financial statements are trade secrets. They are the employer’s property and may not be taken away or copied for competitive use.
On the other hand, names and addresses of medical facilities are not trade secrets if they come from public sources like phone books or other directories.
Before she left, this nurse had built up her employer’s business using her own energy and ability. COURT OF APPEAL OF LOUISIANA, 1998.
A nurse worked for a nursing staffing agency developing new business relationships with client hospitals and other providers and recruiting staff nurses and attempting to match their backgrounds and career objectives with the clients’ needs.
A dispute with her employer over a promotion could not be resolved to her satisfaction, so she tendered her resignation. After tendering her resignation, but before it became effective, she and her husband and a nurse-partner leased office space, took care of phone listings and had an attorney draw up and file articles of incorporation for a new nursing staffing agency.
The new agency was successful from the start. The former employer sued. The former employer obtained from a lower court a temporary restraining order blocking the new agency from operating and an an award of compensation for lost business.
The Court of Appeal of Louisiana overturned the lower court’s actions. As a basic principle, according to the court, it is not unfair competition for a former employee to go into competition with a former employer.
It is unfair competition, and grounds for a lawsuit, for an employee to copy or remove confidential information that belongs to the employer. Files and records are the employer’s personal property and the information in the files and records is protected as trade secrets.
However, an employee is free to use the general knowledge of the employer’s business practices the employee carries away in his or her mind. An employee is also free to go to phone books and directories for potential client information, even if that yields essentially the same client names as the former employer’s client base. According to the court, the law strongly favors business competition. Nursing Enterprises, Inc. v. Marr, 719 So. 2d 524 (La. App., 1998).