Employee Defection: Tools and Strategies for Protecting Company Assets

Transcription

1 Employee Defection: Tools and Strategies for Protecting Company Assets December 17, 2015 Noel R. Boeke Holland & Knight LLP 100 N. Tampa Street, Suite 4100 Tampa, FL Copyright 2014 Holland & Knight LLP. All Rights Reserved

2 Agenda Common law duty of loyalty Trade secrets statute Restrictive covenants Practical steps to protect assets 2

3 Common Law Duty of Loyalty Employee owes fiduciary duty and duty of loyalty to employer Applies to all employees not just managers Applies to at-will employees Written contract not required 3

4 Trade Secrets Florida s Uniform Trade Secret Act Chapter 688, Florida Statutes 4

5 Uniform Trade Secrets Act Trade secret : Information, including a formula, pattern, compilation, program, device, method, technique, or process that: Derives independent economic value, actual or potential, from not being generally know; and Reasonable efforts have been taken to maintain secrecy 5

6 Uniform Trade Secrets Act Misappropriation means: Acquisition or disclosure of trade secrets; and Reason to know trade secret acquired or disclosed through improper means 6

7 Restrictive Covenants Section , Florida Statutes, governs all restrictive covenants entered into on or after July 1,

8 What is a Restrictive Covenant? A restrictive covenant enables: Employers Business owners / purchasers of a business To limit competition and protect business interests from: Former employees Independent contractors or consultants Prior owners / sellers 8

9 Purpose of Restrictive Covenants Protects confidential information Protects specialized training Protects investment in business, developments, and inventions Protects client relationships Keeps company s strategies, practices and procedures from competitors 9

10 Examples of Restrictive Covenants Non-disclosure/confidentiality Non-hiring of employees Non-solicitation of employees Non-solicitation of customers Non-compete 10

11 Requirements for Restrictive Covenants In writing signed by employee Justified by a legitimate business interest Reasonably necessary to protect the legitimate business interest Reasonable in time, area, and line of business 11

12 Practical Steps Before Hire Publish policies to define confidential information and employees duty to protect Establish practices to secure confidential information Become familiar with state laws that govern restrictive covenants and other efforts to protect information 12

13 Practical Steps Before Hire Draft carefully Legitimate business interests Description of trade secrets and confidential information Consideration Independent covenant clause Third party beneficiaries Successors/assigns Tolling clause Include, but do not rely on, choice of law clauses, which may not be enforced in all states 13

14 Practical Steps Before Hire Avoid inconsistencies between agreements containing restrictive covenant and:: Employment agreements Supplements to employment agreements Severance agreements 14

15 Practical Steps Before Hire Talk to applicants about restrictive covenants with previous employers Take appropriate steps to avoid violations; or Negotiate resolution with prior employer before hiring Carefully weigh costs and benefits of paying defense costs or lost earnings if prior employer attempts to enforce covenants Confirm, in writing, either: Absence of restrictive covenants, or Employee s obligation to comply 15

16 Practical Steps Before Hire Establish tracking system to make sure employees actually sign restrictive covenants before hire and to keep signed agreements in secure location Use caution before relying on restrictive covenants inherited from predecessor employers 16

17 Practical Steps During Employment Periodically review policies and restrictive covenants Conduct and document regular training Document legitimate business interests Confidential information Extraordinary training Introduction to customers 17

18 Practical Steps During Employment Provide all needed computers and electronic devices If possible, prohibit the use of personal devices Limit social media to business purposes Implement warning systems to identify potential misappropriation, disclosure, or breach 18

19 Practical Steps at Termination Retrieve all computers, phones, manuals, keys, badges, iphones, smart phones, and other electronic devices, equipment, and company property Immediately terminate access to company and information systems Change passwords to company-owned social media sites 19

20 Practical Steps at Termination Keep employee s account in place for at least 6 months or for the term of the restrictive covenant Designate one person to periodically review s for evidence of improper conduct Consider copying employee s hard drive to preserve evidence 20

21 Practical Steps at Termination Be alert to signs of improper disclosures of information or diversion of company business Review departing employee s social media Touch base with customers and vendors Talk to departing employee about future employment plans Have form letter ready to advise all employees of confidentiality and other obligations 21

22 Practical Steps at Termination If breach occurs, take quick and decisive action with respect to former employee and, possibly, new employer; Cease and desist letter Lawsuit seeking injunctive relief and, possibly, damages Consider developing action plan to address violations, for example: Who to notify regarding violations Lining up bonding companies Arrangements with IT experts to secure and locate evidence 22

23 Thank you! 23