What can you do when an employee with access to your trade secrets leaves to work for a competitor?
Typically, if an employee left a company for a competitor and had a restrictive agreement in place with the former employer, that forms the basis of a lawsuit against both the employee and often the new employer. Those agreements are enforceable even if you fire someone or lay off the employee. So you don’t need to worry about negating the agreement by letting an employee go.
However, in recent years, there has been a new doctrine of law -— the inevitable disclosure doctrine — that allows employers to go after a former employee, even if he or she didn’t sign any type of agreement.
That can cause a problem for employers who are hiring someone from the same business. So you have to be very careful. You could be well intentioned; you could have no desire to steal or misappropriate anyone’s trade secrets; but just by hiring an employee from a competitor, you could be exposing yourself to this type of potential liability.
How can employers protect themselves when hiring from a competitor?
When hiring from your own industry, ask the potential employee if he or she is subject to any restrictive agreements or covenants. If he or she is, you really need to assess whether you can fit that person into your organization and put that person in a position that doesn’t violate the express language of the contract.
If someone doesn’t have something in writing, you still have to understand what that person’s job was with the former employer, whether he or she was exposed to trade secrets, and whether by placing him or her in the same or a similar position at your organization, it would be inevitable that he or she would disclose those trade secrets. You really have to assess where you’re considering placing that person in your organization. But, beware even if a company does everything right, it can still get hit with a lawsuit under the inevitable disclosure doctrine. If that happens, the care you took in hiring works as a strong defense.
John Susany is chair of the litigation and employment group at Stark & Knoll Co., L.P.A. Reach him at [email protected] or (330) 572-1324.