Richard Hunt, The Daily Record Newswire
If there is reasonable suspicion that an employee may take confidential or trade secret information belonging to an employer at the time of separation — whether voluntary or involuntary — then the employer should take immediate action in order to protect its interests. Here is a checklist for an employer to follow:
1. Secure all executed agreements and important personnel records. The company should consider making a copy of all employees’ executed contracts and keeping those extra copies under lock and key.
2. If the employee was assigned a computer and had access to the company’s electronic storage devices and the information stored on those devices, then the employer or its information technology professional should take immediate action to preserve and investigate the employee’s use of the computer. This includes making a “ghost” of the hard drive or removing the computer from active use so it does not become compromised via a co-worker’s use after the employee’s departure. The IT person or forensic examiner should look for evidence of whether the employee has deleted important information belonging to the company, or has downloaded, emailed or otherwise transferred that information to an electronic device of the employee.
3. Upon the employee’s departure, the employer should gather from the employee all electronic devices, documents, business information and property belonging to the company.
4. If the employee signed a nondisclosure agreement or confidentiality agreement, then at the time of departure, the company management or human resources representative should remind the employee of applicable obligations and provide the employee with copies of the agreements as well as applicable policies (including those related to use of electronic devices).
5. If the employee leaves abruptly and the employer does not have an opportunity to conduct an exit interview for the purpose of gathering information and issuing a reminder of obligations, then the company should send a letter to the employee demanding the return of all documents (not the destruction of documents) and the return of all company property. In addition, the letter should put the employee on notice to preserve all data that has been taken so that it may be returned without modification or destruction.
6. If the employee is given the option to return to the workplace to pick up personal articles following termination, then a representative of the employer should accompany the employee to the individual’s desk and supervise the clean-out of information so that no electronic devices are accessed and no materials belonging to the company are taken. The company may want to take photographs so that it has a record of what existed in the office, in case documents and materials disappear later.
7. If the employee is suspected of contacting clients, co-workers or vendors following departure in violation of non-solicitation obligations, then the company should assemble a response team to communicate with those parties. The response team members should be given a script of what they can and cannot say and should be instructed to avoid making any disparaging remarks regarding the former employee. Oftentimes, statements can be announcements saying that the individual is no longer employed with the company and that the person’s duties have now been assigned to others, together with contact information. The employer should choose carefully whom it makes statements to because the former employee may have “friends” whose interests are more aligned with the former employee than the company.
8. Coworkers with information regarding inappropriate solicitations of the former employee or the missing information should be asked to provide signed written statements.
9. Immediate action should be taken to secure the confidentiality of company business information and trade secrets. This includes canceling computer access, disabling passwords, and, under some circumstances, changing locks.
10. If it becomes apparent that the employee is using company trade secrets (including customer information) to solicit sales on behalf of a competitor, then letters may be written to the former employee demanding that the person stop using or disclosing the information and cease and desist from soliciting customers. In some circumstances, the company may also want to notify the new employer of the agreements and policies that were binding upon the ex-employee. The new employer needs to be told that it too may be in violation of statutory obligations prohibiting the knowing receipt of misappropriated trade secrets and confidential information.
11. Similar letters should also be sent to the former employee and the new employer if the ex-employee is soliciting co-workers in violation of a non-solicitation covenant.
12. While demand letters to the former employee and the new employer serve to provide notice, they often are ineffective or ignored. Depending upon the scope of the activities and the harm being caused, the company should seriously consider filing an immediate lawsuit. Lawsuits brought against former employees and new companies knowingly accepting and using information that has been taken often include claims for breach of contract, misappropriation of trade secrets under the Uniform Trade Secrets Act, interference claims, conversion claims, and claims for injunctive relief.
13. Once a lawsuit commences, an employer may also want to seek a temporary restraining order. However, if the company has a good-faith belief that misconduct is occurring, but has a need to learn more facts prior to seeking injunctive relief, then it may want to file a motion for expedited discovery rather than an immediate temporary restraining order. Temporary restraining orders may be sought sparingly where there is strong evidence of irreparable harm. Such procedures are appropriate when the scope of misconduct is known and widespread.
14. If an employee’s misconduct is discovered before resignation is tendered, then the employee should be immediately suspended and/or terminated, and the employer may consider suing the employee for breach of contract and fiduciary duty, fraud and misappropriation of trade secrets.
—————
Richard Hunt is a partner at Barran Liebman LLP. He regularly provides employer advice and solutions, and handles complex employment litigation in state and federal courts. Contact him at 503-228-0500 or rhunt@barran.com.
