Methods for Preventing Employee Theft & Embezzlement in the Digital Age

7/31/2019 Methods for Preventing Employee Theft & Embezzlement in the Digital Age

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[email protected]

www.greenwaldllp.com

630 Third Ave. 15th Fl.

New York, NY 10017212-644-1310

30 Ramland Rd. Suite 201

Orangeburg, NY 10962845-589-9300

Methods for PreventingEmployee Theft & Embezzlement

in the Digital Age

Presented by:

Joel J. Greenwald, Esq.

June 12, 2012


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Non-Compete Issues

More Prevalent

Employee turnover

Voluntary and involuntary much more likely now

Especially with sales personnel

Legal trends

Restrictive covenants are more prevalent

especially for salespeople (depends on state law)

Enforceability, however, often depends oncustomization and how narrow

Technology

Theft is as easy as push of button2


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Non-Compete Agreements andOther Restrictive Covenants

Non-compete agreements

Reasonable in geography, duration, scope

Must be in writing and protect legitimate business

interest

Should only be in writing and signed by key employees

Non-solicitation agreements (employees andclients)

More enforceable prevents most harm

Should only be provided to and signed by key

employees

Confidentiality agreements

Should be signed by all employees

Defines proprietary information (trade secrets)

3 * Boilerplate vs. specifically tailored agreements


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What is the Remedy?

Injunction

TRO

Money damages

Hard to quantify

Lost business

Lost profits

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Additional Causes of Action

Available to Employer

Examples of other causes of action against

employee

Misappropriation ofTrade Secrets

Common Law Duty of Loyalty

Legal right to Protect Against Unfair Competition

Protect Against Conversion of Property Protect Against Outright Theft

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Computer Protection

Have a snapshot taken in

certain circumstances as

employee leaves

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Monitoring Your Employees

I can read any email my employee

sends or receives

True or False

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Why Do Employers Implement

Electronic Monitoring and Workplace

Surveillance Systems?

To prevent theft

To improve productivity

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How Does Employees Legal Right To Privacy

Interact With An Employers Right

To Monitor Workplace Activity?

Courts balancethe employees expectation of

privacyagainst the employers need for control and

operation in the workplace

Courts often distinguish between the employees

work-related activities (less privacy), and

employees private and personal activities in theworkplace (greater right to privacy)

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How Much Privacy Does An EmployeeHave A Legal Right To Expect In

Electronic Communications on the Computer?

Under federal and most state law,

employer can monitor:

Activity on Company-owned equipment (URLs/ e-

mail addresses contacted, times spent) for all

communication

Content of business-related e-mail on Company-

owned equipment

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Email/Internet Policy

What an email/internet policy should contain: Email procedures

All email is property of employer no expectation ofprivacy

Employer has right to monitor (get consent)

Offensive, harassing emails are prohibited

Passwords shall not be made available to others

Internet procedures

Not for personal use

Careful about postings

Offensive or harassing messages are prohibited

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What Are The Legal Limitations On Employers

Use Of Video Cameras For Surveillance In TheWorkplace?

Under many state laws, it is illegal (without a court

order) to make any video recording in any restroom,

locker room, or other area that has been designated

by the employer for changing clothes

Dont record audio!

Selective surveillance e.g., positioning a hiddencamera over the desk of one individual employee

may be discriminatory

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Independent Background Checks

Consent and initial notice required (FCRA)

Notice of reason for adverse decision

Taking action requires care

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Getting References

Another source of

background information

Get them?

Give them?

Defamation concerns?

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Preventing And Preparing For Theft

Electronic monitoring, GPS and

video surveillance

Avoid concentrating too muchauthority in one individual

particularly in accounting,

bookkeeping, purchasing, and

receiving areas

Hope for the best but plan for the worst purchaseinsurance

Hire smart use background checks, interviews and testing

to screen out dishonest applicants

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Investigation Concerns

Investigation report: Be thorough, detailed, factual;

include documents, photos, interview notes, every

page marked confidential (perhaps get outside

agency)

Be careful about your threats to thief! - Extortion

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Taking Action

Internal discipline/termination;

Cooperate with law enforcement/press criminal

charges;

File civil lawsuit;

Seek restraining order to prevent use of stolen

information/trade secrets

Do Not withhold wages!!!

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Disclaimer

The foregoing is a summary of the laws discussed abovefor the purpose of providing a general overview of theselaws. These materials are not meant, nor should theybe construed, to provide information that is specific toany law(s). The above is not legal advice and youshould consult with counsel concerning the applicabilityof any law to your particular situation.

MMXII Greenwald Doherty LLP

All rights reserved. These materials may not bereproduced without permission.

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Methods for Preventing Employee Theft & Embezzlement in the Digital Age