Employee Betrayal: What to Do When Your Sales Rep Secretly Works for a Competitor

A founder of a small Canadian B2B SaaS company shared a distressing situation: their sole, highly trusted remote salesperson was discovered to have been secretly working for a direct competitor for over 16 months, potentially their entire tenure. This deception occurred despite a full-time employment agreement with a non-compete clause. The employee allegedly attended trade shows for the competitor, serviced their leads during company time, and possibly misused company resources like a ZoomInfo subscription. The betrayal was compounded when, upon sensing termination, the employee rage-quit, citing harassment and constructive dismissal.

Initial Shock and Immediate Actions

The revelation that a trusted team member, with whom the founders believed they had a solid relationship, was actively working against them is a significant blow. The first and most echoed piece of advice from the community is unequivocal:

Consult a Lawyer: This is paramount. Legal counsel can help navigate the complexities of the employment agreement, non-compete clause (enforceability varies by jurisdiction), potential breach of contract, and the ex-employee's claims of harassment. Document every piece of evidence meticulously.
Assess Communications: Review all of the ex-employee's communications to understand the extent of the damage, potential lead diversion, and any impact on existing customers.

To Sue or Not to Sue: The Startup Dilemma

While the desire for retribution or recovery of damages is understandable, the discussion highlights a crucial consideration for small companies:

Financial and Resource Drain: Pursuing legal action can be incredibly expensive, time-consuming, and emotionally draining. For an early-stage company with limited resources, this can divert critical focus from growth and operations.
Low-Cost Defensive Tactics: Even if a full-blown lawsuit isn't pursued, documenting the case and employing low-cost legal tactics can be useful for defensive purposes, especially given the ex-employee's counter-claims.
Targeting the Competitor: An insightful suggestion was to investigate the competitor's role. If the competitor knowingly engaged the employee under these circumstances, they might be liable. Pursuing action against the competitor, who likely has more resources and possibly insurance, could be a more viable path than directly targeting the ex-employee.

Rebuilding and Protecting Your Business

Beyond legal considerations, the focus must shift to recovery and future protection:

Re-establish Sales Operations: This is the top priority. The company needs to fill the sales gap quickly and efficiently.
Leverage Networks: Inform professional and investor networks about the individual's actions (carefully, to avoid defamation claims). This can help prevent them from harming other businesses and assist in finding a trustworthy replacement.
Rally the Team: Turn this negative event into a catalyst for team cohesion. Frame it as overcoming a hidden handicap – the team can now move forward unencumbered.

Lessons Learned and Future Prevention

The discussion also touched on broader lessons:

The Reality of Betrayal: Unfortunately, such breaches of trust happen. It's a reminder to remain vigilant.
Remote Work Challenges: Remote work can make it harder to vet individuals and monitor performance or suspicious activities. Cross-cultural work can add another layer of complexity.
Sales Incentives: One commenter suggested that for early-stage companies, sales might be better handled by founders, as outsourcing sales often means incentivizing solely by money, which can lead to purely transactional and sometimes unethical behavior.
Don't Dwell on It: While it's crucial to learn from the experience, founders were advised not to beat themselves up too much. The focus should be on moving forward and strengthening the company.

Ultimately, the advice leans towards a pragmatic approach: secure legal counsel, carefully assess the cost-benefit of extensive legal battles, prioritize business continuity and rebuilding, and use the incident as a hard-learned lesson in trust, vigilance, and operational resilience.