To the outside world, it may seem like you’re living the dream.
You went to university, got a prestigious degree (or two) and then earned a highly sought-after position at a renowned business. You make decent money and maybe you even like your job, but you still hear that faint inner calling to break out of the hamster wheel and blaze your own path. You appreciate that “you have it good” but you feel inspired to create something “great.” You feel the urge to start your own venture and bring something important into the world.
Still, you understand the importance of being rational and planning properly before leaving the security of your job behind and jumping into the unknown. Here are a few legal issues you might want to consider before you make the leap.
Intellectual property
One strategy that professionals transitioning into self-employment often use is to quit their job and then contract their services back to their employer as an independent contractor. This allows the professional to continue to earn a bit of regular income while building up their client list. This also gives the employer time to find a new employee who can fill the shoes of the existing professional. If you and your former employer both agree to pursue this path, intellectual property ownership is an issue that may arise.
According to Canada’s Copyright Act, the copyright in any work that a person creates in the course of his employment belongs to the employer. An independent contractor, on the other hand, typically holds the copyright in any work that he creates. The independent contractor then grants his client a license to use the work created. Therefore, any professional in transition and his former employer may want to address the issue of intellectual property rights if they decide to continue to work together after the traditional employment relationship ends.
Non-solicitation
Throughout the course of your employment, you may have built up great relationships with your employer’s key clients and suppliers as well as with some of your co-workers. Some of these key players may be so loyal that they are willing to follow you into your new venture. However, you may find yourself in hot water if you attempt to lure away your former employer’s customers, suppliers and other workers.
Confidentiality
Employment contracts often prohibit employees from using company secrets, client information, company records and any other information of a confidential nature. This obligation usually survives the end of the employment relationship. Therefore, a professional in transition who is now building his own roster will not have the right to use his former employer’s confidential information to do so.
This is just a general overview of a few of the legal issues that may be relevant for a professional in transition. For more specific information on the topic, you may contact Kelly Francis at (514) 802-7736 or at info@kellyfrancisavocate.com.
Disclaimer: This article merely gives readers an overview of the issues discussed therein and is not legal advice. Please do not take action based on this article alone without first seeking the legal counsel appropriate for your specific situation!
