You hired a contractor to manage customer orders and shared your sales records. After the contract ends, you learn that the contractor is contacting those customers for another business. You might worry that your private records are helping a competitor take your repeat orders.
California law lets former contractors compete, but not by misusing trade secrets. If the contractor uses protected records despite a duty to keep them private, you may have grounds for a claim. What matters is what the records contain and how the contractor used them.
What makes your customer list a trade secret?
Not every customer list qualifies for legal protection. A trade secret is information that has value when competitors do not know it or cannot easily obtain it. You have to take reasonable steps to keep that information private.
For example, your list might show which customers place regular orders and the prices they pay. Those details give competitors useful information about your business. You help keep them private by limiting who has access to the list or asking contractors to keep the records confidential. Even if customer names appear online, the details you have gathered about their buying habits may still qualify for protection.
When does using the list break the law?
A former contractor may contact your customers after the job ends. However, California law prohibits the misuse of trade secrets. This includes taking private business information through improper means or using it despite a duty to keep it secret.
Suppose the contractor copies your private sales records and uses them to approach your regular customers. If those records qualify as trade secrets, that could support a legal claim. On the other hand, a contractor who finds the same customers through lawful, independent research generally has the right to contact them.
If you prove misuse, a court might order the contractor to stop using your records. You may also recover compensation for your proven losses or gains the contractor made from the misuse, without counting the same harm twice.
What records are worth keeping?
You may want to save messages from customers who received the contractor’s offers. Your agreement and access records might show what the contractor had permission to use. These details could help you assess whether the contractor misused your records and whether you have grounds to pursue a claim.