When Your Driver Becomes Your Competitor

LCT Staff
Posted on July 1, 2005

It happens to every operator if they have been in business long enough. Your best driver, your friend and comrade, says goodbye and overnight he is your competitor. He fights for your accounts, he steals your employees and he leaves you bitter angry.

A smart business owner is aware of the possibility at the time of hire that a driver can become a competitor. Some simple strategies, careful listening and common sense can make it extremely difficult for a chauffer to become a serious competitor.

Yet this sort of defection can happen even to the best of operators before they realize what’s happening. For instance, Lee Sickles, president of Le Mark Limousine of Villerica, Mass., is a busy man. His company has grown to 12 vehicles, and like a lot of operators; he is chronically in search of quality chauffeurs. When Charles Charming (not his real name) came along, Sickles quickly added part-time dispatcher to his duties.

“I was getting married at the time and the business was beginning to grow. He used a reference from another limousine operator, who unfortunately, I never spoke to,” says Sickles. In fact, none of Charming’s references were carefully checked. That turned out to be a critical mistake, because the new chauffeur/dispatcher has an agenda different from that of Sickles. Charming’s true motives might have turned up in a background check. “At first he did a good job and was extremely dependable,” Sickles recalls. “He spoke well and knew his way around the area. He was a good dispatcher, which was difficult to find. We were growing so fast that just getting the trips done every day was a major challenge.”

But the bloom quickly faded from Charming’s rose. “I basically caught the guy cheating my company,” Sickles relates. “He lasted sox months. He was terminated for cause, and then started his own limousine company with a partner. He contacted every one of my clients and actually landed one of my best accounts. I am not interested in taking the guy to court. It would probably cost tens of thousands of dollars to sue him. I figure I just got an expensive lesson.”

Sickles advises all employers to take an active approach to employment references. “You need to push previous employers about why a person is not working for them. Every good limousine company is short on drivers. There has to be a reason why that driver is available.” Sickles also cautions operators to be leery of the so-called hero. “One of the things this guy did to me as a dispatcher was the he created ‘situations’ with good clients. He would conveniently forget to schedule a pickup for a regular customer, and then at the last minute he would pick the passenger up himself. He made my company look incompetent. Then he would say to the passenger that not only is our company screwed up, it is overcharging you, and by the way I am starting my own limousine company. It was my fault for not being closer to the situation. I now realize that no matter how busy you are as a business owner, you cannot permit this situation to occur.”

The topper to Sickles ordeal came in the form of a letter. “I was just notified by certified mail by this guy’s attorney that I must cease and desist disseminating and negative information about him or his company. Gee, what would ever make me do that?”

When You Should Stay Friendly More common than the “Charles Charming Scenario” is one where a reasonably honest, hard-working chauffeur decides to quit his job and start his own business. No hard feelings exist; just another person seeking the American Dream. David Kiely, president of Classique Limousine in Northbridge, Mass., discovered that one of his chauffeurs was just such a person. Kiely learned through a mutual acquaintance about this impending change. “I didn’t get angry at all. I wanted to keep the emotion out of the situation,” he says. Instead of confronting the person or even considering his legal options, Kiely approached his new competitor with an olive branch.

“I took the attitude that every person is entitled to get into the business,” Kiely recalls. “I sat him down and told him I had no problem with him, as long as he went into business the right way. As long as he got the correct permits, licenses and livery insurance, I was fine. I also emphasized how and why it was necessary for him to establish fair prices for limousine rental. I was very honest about the costs and problems associated with running a successful company.”

The new business opened and Kiely even began using his former employee as a subcontractor and when he needed an additional vehicle for a wedding. “I knew that he was trained and properly because I trained him myself. And by getting a chance to spend time with him out in the field, we established an even better working relationship,” he notes. Kiely, who is also president of the New England Livery Association (NELA), says he is surprised by the reaction of other company owners to the same situation. “I figure that we live in a country where any man can become a business owner. I made the decision to own my own business and it would be hypocritical for me to criticize his decision to do the same thing.”

Kiely says he would pass on simple advice to an operator facing this situation. “I would tell the business owner to let his clients know what is going on. Get in the car if the clients are local, or make a phone call or write a letter if necessary to the people you cannot visit. Tell your clients that one of your chauffeurs will probably be soliciting your business. If your company is in order, and you consistently deliver good service, your clients will remain loyal. I believe that a chauffer who could successfully start a business from his employer’s client base was really taking clients who were already dissatisfied.”

Kiely’s former employee is now out of business. “The other benefit to lending a hand in this situation is that if the person realizes that owning a business is not for them, you may get them back as a driver.”

Whether to Terminate or Not Firing chauffeurs who you believe are planning to launch their own business may be an option. “Employment at will” is a legal concept under which an employee is hired and can be fired at the will of the employer. The employer has the right, unless restricted by law or contract, to refuse to hire an applicant or to terminate an employee for any reason, or no reason. But it is important to note that the body of U.S. legislation known as the Equal Opportunity Laws prohibit discrimination in employment based on color, race, religion, national origin, gender, age or disability. Firing a chauffer who you believe is planning to be your competitor may trigger another series of problems far greater than lost clients or problems far greater than lost clients or personal embarrassment.

Richard Mulcahey, a Philadelphia-based attorney with extensive experience in the industry, believes it is almost impossible to enforce a non-compete agreement with a chauffer. “An employer may have an employee agree to a restrictive covenant and a court would recognize this. But these agreements are almost always for high-end positions. The general manager, for example, of BostonCoach in Philadelphia could be asked to sign an agreement that would prevent him from going to work for Carey or Dav El in Philadelphia. This is a reasonable request. The employer has a great deal invested in the high-end employee, and he or she is privy to valuable competitive information. But a driver who earns his living as a driver would be a very sympathetic figure if you asked a judge to prevent him from pursuing his livelihood. The driver would argue that you are denying him the opportunity to work.”

Mulcahey says a business owner does have some rights when a chauffer becomes a competitor. “If your driver has cultivated a personal relationship with a client he as driven, there is nothing you can do to prevent that chauffer from soliciting that client for his own business. But if your employee takes your client files or lists and directly solicits your clients, then you may be able to sue him,” Mulcahey acknowledges that state rules vary. “But the employee is committing a theft of your property when he takes that list. These are privet business documents that the employee has no right to. You may sue them for tortuous interference with your business.”

A business owner whose employee abruptly leaves with the client list in hand may go to civil court to seek a temporary restraining order. Mulcahey says, “This can be done very quickly and you may be in court inside of a week. But a week may be too late, and this process takes a great deal of money.” Mulcahey also notes that clients might be asked to come to court to testify when and how your former employee solicited them.

“Also, it may be helpful to spell out in our employee manual what information is mutually acknowledged to be confidential,” Mulcahey says. “Have the employee sign off and acknowledge this rule. Put in there specifically that customer lists and account files are solely the property of the employer. The big things is to be careful during the hiring process and limit the amount of company information you give your employee.”

10 Tips to Help Prevent Your Driver From Becoming Your Competitor

Although it may be impossible to prevent your driver from becoming your competitor in the future, here are some things that can make it more difficult for your employee to do so:

1. Check references at the time you hire your employees. Although legally a past employer may only confirm employment dates and eligibility for rehire, you may be able to get more information.

2. Call your state PUC to see if your prospective employee has a license application pending. Applicants for a limousine-operating license often go to work for an established company to gain experience.

3. Do a criminal background check before you hire anyone. (See Charles Charming scenario.)

4. Listen to your other employees. A driver may leave to start his own company will often confide in fellow employees.

5. Give employees only the amount of information necessary to do their jobs. A driver should never be allowed to view a copy of your complete client list.

6. Put safeguards into your computer. Keep your clients files in a secure part of your computer. Download critical information on disk and keep the disks with you.

7. Do not let one chauffeur drive a client exclusively. It becomes very easy for a driver to use this key client as a base for his own limousine company.

8. Never let your guard down! Always be alerts to employees asking for information that is unnecessary to do their job.

 9. Listen to your customers! Send out customer surveys and keep in personal touch with your key accounts. It is much more difficult to lose clients when you have a personal relationship with them.

10. Have regular one-on-one meetings with all of your employees. Regular conversations may alert you to the fact that this employee is considering becoming your competitor.

LCT Staff LCT Staff
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