EMPLOYMENT LAW BRIEFING 2015 - DLA Piper/media/Files/Insights/Events/2015/01... · Are status updates a solicitation? Coface Collections North America, 430 Fed. Appx. 1162 (3rd Cir

EMPLOYMENT LAW BRIEFING 2015

*This presentation is offered for informational purposes only, and the content should not be construed as legal advice on any matter.

Mobility and Restrictive Covenants

Overview

Protecting Assets at the Front Door: Confidentiality, PIAA and Non-Disclosure Agreements

What Is a Solicitation?

Protecting Your Confidential Information When an Employee Leaves

Post Employment Disputes

2Employment Law Briefing 2015 January 2015

Protecting your assets at the front door: Agreements with new employees

Confidentiality Agreements

Restrictive Covenants (generally not permitted in CA) Non-competition

Non-disclosure

Non-solicitation

Written Acknowledgement of Policies Regarding Use and Monitoring of Email, Computers and Other Electronic Devices


What is a solicitation?

Are status updates a solicitation? Coface Collections North America, 430 Fed. Appx. 1162 (3rd Cir.

2011), profile updates and social media posts can be introduced as evidence of breach

Sasqua Group v. Courtney (E.D.N.Y. Aug. 2, 2012), court found client list was publicly available info through LinkedIn contact list, and denied trade secret protection

NDSL, Inc. v. Patnorde, 2012 WL 6096584 (W.D. Mich. Dec. 7, 2012), generic LinkedIn invitation found insufficient to show customer solicitation in violation of non-solicit agreement


Confidentiality

Uniform Trade Secrets Act Adopted in 47 states.

Two part definition of a “trade secret” “Is the subject of efforts that are reasonable under the circumstances to

maintain its secrecy.” Derives independent economic value from not being generally known to

the public or others who can obtain economic value from its disclosure or use [and is not readily ascertainable by proper means]


Confidentiality

Best Practices Principles Targeted but not onerous

Focused on confidentiality

Takes into account how social media actually works


Confidentiality agreement

In most jurisdictions, continued employment is sufficient consideration. Not clear in California, so ensure consideration exists

Defines customers, customer contacts, similar compilations as “Confidential Information”

Employer owns Confidential Information Labor Code section 2860

Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514


Confidentiality agreement

Employer owns the “Confidential Information” in whatever form it may exist Hard copy records

Electronic format

Employee’s memory


Best practices after employment

Policy regarding remote wiping and monitoring of drives and devices

Exit interview – set expectations

Inventory what was returned


Best practices after employment

Reminder letter

Cease and desist letter

Evidence preservation demandMay need a court order

Litigation


The burning questions in every restrictive covenant dispute

Is the Agreement Enforceable?

Did the Individual Violate Its Provisions?


Is the agreement enforceable?

In most states OTHER than California, a restrictive covenant must be reasonable in scope: Time 1-2 years in the employment context Sale of a business & then 5 years

Geography An activity restraint, such as non-solicitation of customers can

satisfy Activity Restrained Must Serve A Legitimate Purpose To preserve confidential information To protect customer relationships


Enforceable If There Is

Any Legitimate Purpose

Consideration Beyond Mere Employment

Proof That Confidential Information Was Actually Given at the Outset of Employment

Blue Penciling Prohibited

Enforceability issues vary state-by-state

13

SimplyUnenforceable

Employment Law Briefing 2015 January 2015

Blue Penciling Allowed

Blue Penciling AllowedTo Remove, But Not To Add

Blue Penciling Only In Connection With The Sale Of A Business

Unclear

Blue Penciling Not Allowed

Is blue penciling – court modification to legal limit – allowed?

14Employment Law Briefing 2015

Generally enforceable with some relationship to State

Follow the Restatement; enforceable if there are contacts with the State, and the contract doesn’t offend public policy

Generally will not enforce choice of law provision

Beware of choice of law limitations


What to do (and not to do) once an employee has left to compete


Example of how NOT to draft A letter

17

Dear John,

I am in receipt of your resignation letter. Please remember that as condition of your employment with Acme Co., you signed a non-compete agreement. That non-compete agreement provides that for a period of two years after your employment with Acme, you will not solicit Acme’s customers or employees; and that you will not retain, use, or disclose any of Acme’s proprietary trade secrets or confidential information. This letter is a reminder that you are obligated to abide by the terms of your non-compete agreement. Please be advised that Acme will take all steps necessary to ensure their interests are protected, including filing a lawsuit against you and/or your new employer.


our Company

our Company. Our

Acme employees,your company’s confidential,

Generic Reminders Prompt Generic Denials

The response you will get:


Dear Former Employee,

I am in receipt of your resignation letter. As a condition of your employment with Acme Co., you signed a non-compete agreement which prohibits you from you from working for a competitor for two years. It has come to our attention that you may have accepted employment with a competitor of Acme Co. In order to assure Acme that you are abiding by the terms of your non-compete agreement, we would like some basic information:

•Where are you currently working?

•What is your position with your new employer?

•What are your responsibilities?

•Have you and your new employer put in place any protections to ensure that you are not violating your agreement with Acme and that you will not disclose, rely upon or use Acme’s confidential, proprietary information? If so, what is that plan?

Draft A letter that asks questions


Dear Former Employee,

I am in receipt of your resignation letter. As a condition of your employment with Acme Co., you signed a non-compete agreement which prohibits you from you from working for a competitor for two years. It has come to our attention that you may have accepted employment with a competitor of Acme Co. In order to assure Acme that you are abiding by the terms of your non-compete agreement, we would like some basic information:

• You participated in year-end strategic planning meetings less than 30 days before your resignation. Please tell us when you first accepted employment with your new employer.

• Please confirm, by signing the attached affirmation, that prior to your resignation you returned, and did not take any of the Company’s proprietary, confidential information.

Draft A letter that asks questions


What if you’re on the defensive

Stave off a TRO by providing enough assurance and a cooperative spirit that letter keeps them from filing

Shift burden to former employer to be very specific about what its trade secrets are, and measures they recommend we take

Imply that they will have to expose their trade secrets in litigation and all of their measures to maintain as secret will be under scrutiny

21

Dear Mr. Jones:

Thank you for your letter. ACME takes your concerns very seriously. We have confirmed with Ms. Smith she has already returned any of ABC’s confidential information that she may have had in her possession prior to her resignation. Likewise, we have made it clear to Ms. Smith that she is not to reveal any of ACME’s confidential information, such has business strategies, marketing strategies, pricing, vendors, etc.

If you have concerns that Ms. Smith may be at risk of disclosing your confidential information despite our commitment, it would be helpful if you could provide a detailed description of the information that Ms. Jones had access to while employed at ABC. Once you provide that information, we can than compare your information with her current job duties to ensure that no inadvertent disclosure occurs

Sincerely,

Michael Sheehan


Get your house in order before you sue

A prerequisite to any trade secret claim is demonstrating that your information is “secret,” and that you take “reasonable measures” to protect that secrecy:Make sure your handbook has a strong confidentiality statement

Ensure that access to confidential information is only provided to those employees who have a need to know

Work with your IT group to prevent employees from copying or printing certain extremely sensitive information

Have employees regularly acknowledge that the information they are accessing is confidential and is to be used for business purposes only


I understand that the information that I am accessing is confidential and proprietary. I agree that I will not use, disclose, or reveal this information to any person except when acting within the scope of my responsibilities

for the Company

I Agree


Documents

EMPLOYMENT LAW BRIEFING 2015 - DLA Piper/media/Files/Insights/Events/2015/01... · Are status updates a solicitation? Coface Collections North America, 430 Fed. Appx. 1162 (3rd Cir