Your Top Talent Walks Out the Door: Now What? How to Stop Your Competitors from Raiding Your...

Your Top Talent Walks Out the Door: Now What?

How to Stop Your Competitors from Raiding Your Workforce and Engaging in Unfair

Competition in the U.S. and Canada

Wednesday, June 9, 2010

Sponsored by the Employment Law Alliance

© Employment Law Alliance

Introduction

-2-© Employment Law Alliance

Presenters

Linda H. Joseph, Moderator, Schröder, Joseph & Associates, LLP , Buffalo, NYljoseph@sjalegal.com

 Betty S.W. Graumlich, Reed Smith LLP, Richmond, VA bgraumlich@reedsmith.com

Steven M. Gutierrez, Holland & Hart LLP, Denver, CO,sgutierrez@hollandhart.com

-3-© Employment Law Alliance

Presenters

Gregory J. Heywood, Roper Greyell, Vancouver,

British Columbia, Canadagheywood@ropergreyell.com

Andrew H. Smith, Director, Associate GeneralCounsel, Citigroup, New York, NY

andrew.smith@citi.com

Barry M. Willoughby, Young Conaway Stargatt & Taylor, LLP, Wilmington, DE

-4-© Employment Law Alliance

What Happens When They Walk Out?

-5-© Employment Law Alliance

• Exit letters to employees enclosing the agreement

• Preliminary injunction actions

Drafting Permissible Restrictions

• Make sure it is part of a valid employment contract

• Avoid Boilerplate Covenants• Regional differences: time limitations/

geographic limitations/scope limitations• Make sure it is reasonable: narrow the time,

place, and activity• Understand the non-compete statute of the

state in which you do business

 -6-

© Employment Law Alliance

Drafting Permissible Restrictions

• Non-solicit/non compete • Confidentiality provisions (definition of

confidential information, UTSA protections, time restrictions)

• Patents/Intellectual Property ownership• Bluelining v. segregation provisions• Liquidated Damages Provisions• Provisions granting consent to send the

agreement to new employers

-7-© Employment Law Alliance

Drafting Permissible Restrictions

• “Re-write” States: Courts can re-write overbroad non-competes to limit restrictions to facts at issue.

• “Blue Pencil” States: Courts cannot modify agreement, BUT…

– They can enforce separate lawful covenants within the contract, and

– Strike language where changes are grammatically possible

• “Public Policy” States: Non-competes are prohibited as a matter of public policy

-8-© Employment Law Alliance

Preventing a Temporary Restraining Order

• Fiduciary duties

• Contracts

• Advice to prospective employee 

• Hiring groups of employees 

• Chinese Walls 

• Doctrine of Inevitable Disclosure

-9-© Employment Law Alliance

Test for Injunctions/ Proof of Damages

• Regional differences 

• With agreement 

• Without agreement 

• Bonding

-10-© Employment Law Alliance

Strategies

• Audit your Internal Security policies

• Demand letter 

• Damages or injunction? 

• Temporary restraining order v. preliminary injunction – does it matter?  

• Sue employee, employer, or both?

-11-© Employment Law Alliance

Wrap-Up

Immediately following the webinar, after you disconnect, a survey will automatically appear on your computer screen asking you to evaluate the webinar.  Please take a few minutes to complete it so that we can continue to improve the quality and delivery of future ELA-sponsored webinars. 

To listen to this webinar again or to any past webinars, please visit our website at: www.employmentlawalliance.com.

We regret that we cannot give CLE or HRCI credit for this webinar; however, a Certificate of Attendance and the necessary supporting materials are now posted on the ELA website. Click this webinar name on the ELA website and scroll down to the link for “certificate of attendance.”

-12-© Employment Law Alliance