If you have been involved in as many trade secret and non-compete disputes as I have, and if you follow the cases as I do, you sometimes feel like you are watching a variation of the Direct TV advertisements admonishing “Don’t attend your own funeral.” The warning that goes ignored all too often? Departing employees making the same mistakes (or bad decisions) in case, after case, after case.
A lot of my posts focus on protecting companies, inventors and individuals who believe someone else has taken their trade secrets or or violated a non-compete. However, the other side of the coin is just as important — namely, what an individual and his new employer should do to avoid being sued for allegedly breaching an agreement or stealing trade secrets. Given these recurring problems, I thought it would be worthwhile to outline what an employee should consider not doing when he or she leaves a job to join a competitor (see my disclaimer on the side of this post: this is NOT legal advice!).
Switching jobs is stressful enough without taking unnecessary chances that put an employee and his/her family at risk, and I have outlined the mistakes and bad decisions that seem to reoccur time and time again. So without further ado, I present the Trade Secret Litigator’s Seven Deadly Sins of Departing Employees:
Rule No. 1: First and foremost, do NOT — I repeat do NOT — take or copy anything without your employer’s written consent. There is no worse piece of evidence than proof that someone walked out with a box of important company files, forwarded sensitive files to a personal email account, copied customer information on a thumb drive, or photocopied relevant documents before he/she left. It makes the employee look dirty, untrustworthy and unethical. It takes away the former employee’s strongest weapon if he/she is sued: their ability to present themselves as the chaste David bullied by the over-reaching Goliath.
Taking or copying this information also doesn’t get the employee anywhere because its removal can be easily discovered by the former employer. Most likely under the terms of the agreement, it is probably not the employee’s to begin with, so the employee doesn’t have any right to take it, and a court will order it returned anyway. If you believe under the circumstances of your relationship that you have some ownership or right to those materials, raise it with your employer upfront, in advance, and in writing. Take the high road and you will be better off for having done so.
Rule No. 2: Tell your new employer about any agreements that you might have during the interview process. If you are not restricted from doing so, share a copy of the agreement with that prospective employer. No one likes surprises and by failing to inform that new employer, you are exposing it to the risk that it will be accused of interfering with any non-compete, non-solicitation or confidentiality agreement without giving it the opportunity to weigh that risk before hiring you. You are also opening yourself up to potential termination for misrepresentation by not disclosing that agreement.
Rule No. 3: Do not contact or solicit any customers or fellow employees BEFORE you leave. In Ohio, for example, as well as in many other states, you have a duty of loyalty to your employer while you are still receiving a paycheck. While the law likely recognizes your right to interview with new employers, form a new company or take some other steps in anticipation of leaving, most courts frown upon any solicitation of clients or fellow employees while you are employed. Any effort to solicit or recruit customers or employees is like pouring gasoline on a fire, inflaming a potentially volatile departure to a competitor.
Rule No. 4: Do not delete or erase anything. The cover-up is always worse than the crime. Generally, most employers won’t discover this until later but if they do, it will make you look even worse than if you took copies of anything. If the other side discovers you erased or deleted a relevant file, you can refer to rule No. 1 for how bad it makes you appear.
Rule No. 5: Don’t send anything to your personal email account during your final days. Even if the email is innocent or forwarding uncontroversial information, it simply looks bad. You can bet that your former employer’s lawyer will attach a sinister motive to whatever is sent.
Rule No. 6: Don’t back anything up. Former employees frequently claim that they need to preserve their own personal information (i.e., insurance, banking or other matters). However, other company information invariably gets copied (see No. 5 above).
Rule No. 7: Don’t go without legal advice. You can bet your former employer will lawyer up, so it is critical to consult with a lawyer well-versed with the law of non-competes or trade secrets in your state. Yes, this could be construed as a shameless shill for my profession but the consequences of failing to do so can be dire — simply put, if you bungle this, you could find yourself out of work for one or two years. Fortune favors the prepared and no breadwinner can afford to be out of work long today.
This process can be stressful but courts are more favorable to the plight of employees looking for greener pastures than in years past. A tough economy and the flexibility given to courts to be equitable have tipped the balance in favor of employees who have played by the rules.