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

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

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Presenters

Linda H. Joseph, Moderator, Schröder, Joseph & Associates, LLP , Buffalo, [email protected]

Betty S.W. Graumlich, Reed Smith LLP, Richmond, VA [email protected]

Steven M. Gutierrez, Holland & Hart LLP, Denver, CO,[email protected]


Presenters

Gregory J. Heywood, Roper Greyell, Vancouver,

British Columbia, [email protected]

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

[email protected]

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


What Happens When They Walk Out?


• 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

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© Employment Law Alliance


• 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



• “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


Preventing a Temporary Restraining Order

• Fiduciary duties

• Contracts

• Advice to prospective employee

• Hiring groups of employees

• Chinese Walls

• Doctrine of Inevitable Disclosure


Test for Injunctions/ Proof of Damages

• Regional differences

• With agreement

• Without agreement

• Bonding


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?


Wrap-Up

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Documents

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