Will My Employer Sue Me for Starting My Own Business?

Will My Employer Sue Me for Starting My Own Business?
Image credit: Illustration © Jason Schneider
Magazine Contributor
The Ethics Coach
4 min read

This story appears in the December 2014 issue of Entrepreneur. Subscribe »

Q: When people come to my dental practice for a second opinion, they often tell me about recommendations other dentists have made that, to me, seem aggressive or excessively expensive. Isn’t it unethical to lead patients to an overkill solution? What are my responsibilities when other people’s patients are being steered unduly toward costly solutions? 

A:  This question got me thinking about the ethics of upselling. Dentists aren’t the only ones who push a Cadillac approach when a midsize remedy would do just fine. Whether inspired by perfectionism or the pursuit of more money, upselling is based on rationalizing value to clients, not confirming it. The problem is made worse when entrepreneurs don’t regularly discuss ethical behavior and values with employees, who may end up thinking their sole motivation is bigger sales. 

As for the issue of second opinions: They’re neither an opportunity to solicit business nor to slam the competition. Just share your professional assessment so that the patient (or customer) can make an informed decision. 

If you’re worried that upselling is a widespread problem in your industry, start discussions about best practices with your professional network. Perhaps you’ll provide the wake-up call some of your colleagues need. 

Q: Is it ethical to generate leads by printing an 800 number paired with a pressing question, without putting my company’s name in the ad? That way they’re calling for information, and the leads are hot.

A:  There is something just plain shady about a business that plays games to bring in customers. No matter your intentions, the strategy comes across as unethical. If people don’t know who you are or what you’re trying to sell and have no way to check out your reputation and track record, they don’t have the information they need to be considered “hot” leads. Preying on people’s fears and vulnerabilities through the use of provocative or “pressing” questions is manipulative. Anonymous selling turns individuals into numbers; they lose both the respect they deserve in the selling process and any basis for a relationship. 

“Because anonymous selling is seen as deceptive, it is not considered an effective selling practice by reputable sales trainers,” confirms Patricia Whalen, marketing communications trainer and president of Sarasota, Fla.-based Whalen Communications Group.

Q: I’m a test engineer for a major print manufacturer. My colleague and I would like to start an e-commerce store to sell products that are somewhat similar to those produced by our employer. Our products would have a solid price advantage over those of our employer but wouldn’t infringe on any patents or intellectual property rights. Are we crossing the conflict-of-interest line? 

A:   Some practical matters first: If you hope to operate the side business while keeping your job, make sure you know your company’s policy on moonlighting. And, if you signed a noncompete agreement when you were hired, make sure your new endeavor doesn’t violate it. 

If all that’s OK, be upfront with your boss about the new venture and ask for approval. But before you knock on that door, think about this: If the new business has the potential to compete with that of your employer, why would they want you to stay? 

If you really want to keep your job, you need to figure out a plan that makes your new business a mutually agreeable win-win. And if you do manage to get the boss’s thumbs-up, remember not to work on your side project while on the clock at your job. 

If the boss doesn’t approve, and you decide you’re ready to go out on your own, find the best way to wind down your work and leave on good terms. Don’t solicit your employer’s customers or suppliers before or after you leave, says Jim T. Priest, a human resource attorney with Rubenstein & Pitts in Oklahoma City. He also cautions not to take any company information with you or materials that could help you identify potential suppliers. 

“When you work for someone, be loyal to them,” Priest says. “When you leave, don’t take a pen or a Post-it note. It’s the best way to stay out of trouble.”  

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