It is crucial for employers to understand the importance of “Screening & Interviewing Candidates” in an attempt to minimize and mitigate the risk of litigation for hiring from a competitor. Some employers have notoriously used job interviews to gather and collect intelligence concerning their competitors. In such scenarios, interviewees and potential candidates are sometimes elicited and induced, inadvertently (at times intentionally), to reveal confidential information concerning a competitor’s business, such as profit margins, future strategies and plans, client lists, and/or customer identities.
Interviewees would be violating common law confidentiality principles, post-employment confidentiality restrictions, and/or existing confidentiality agreements when they engage in the disclosure of such information. For this reason, in addition to requiring that interviews where employees start disclosing confidential and/or sensitive information be stopped immediately, hiring employers should ensure that interviewers have been trained on the importance of avoiding asking questions that might elicit unauthorized and improper disclosure of proprietary information.
As a continuation of this series, we now move our discussion forward by hammering on the importance of “Knowing Who You Are Hiring,” which is another thing the hiring employer may have to consider in an attempt to avoid, minimize, and/or mitigate the risk of litigation for hiring from a competitor.
Hiring from Competitors – Knowing Who You Are Hiring
It is critical to have a comprehensive understanding of the facts to effectively minimize and accurately evaluate the risk of litigation involved with hiring from competitors. Most importantly, the hiring employer must take a proactive step towards knowing precisely whom they would be hiring. Essential information the employer must know include, but is not limited to, (1) the current job title of the candidate, (2) the extent of the candidate’s knowledge of and exposure to competitively valuable information, such as trade secrets or other proprietary information, belonging to the competitor, (3) the candidate’s responsibility over relationships with key clients, (4) the candidate’s importance to the competitor’s business, and (5) the full scope of a candidate’s responsibilities to the competitor (geographically and/or substantively).
With these facts, the hiring employer would be in a better position to evaluate and understand the competitor’s reaction upon realizing that it has lost an employee to a rival. Further, in addition to creating institutional protections (discussed in our blog post “Hiring from Competitors – Creating Institutional Protections” that provide assurances against breach of restrictive covenants, the hiring employer may also be able to structure the candidate’s position in the event the individual is subject to potentially valid post-employment restrictions and covenants.
Notably, the hiring employer should be aware of the resources it can use in obtaining necessary information about the potential hire and the role the individual played at the competitor’s place. Some of the key and available public resources where such information would be obtained include public-facing networking sites that include LinkedIn, the employer’s own public-facing platform, and industry directories. It goes without saying that due to the possibility that candidates would provide inaccurate or self-serving information about themselves, hiring employers should not rely entirely on individual presentations, no matter how helpful obtaining that information directly from the person would be. Instead, they should make good use of the many public sources to verify any information the candidate provides independently.
However, hiring employers must also take precautionary steps towards how they obtain information from candidates’ social media platforms. This is because, due to the expansive laws and regulations on the right to privacy, requiring applicants to accept connection requests or provide social media passwords is prohibited in many states. Accordingly, when evaluating whether to depend on password-protected social media information or that which should not be seen and accessible to the public, employers should remain both conversant and compliant with relevant federal, state, and local laws.
Finally, obtaining information about the competitor (the candidate’s former employer) might also prove a fruitful step in knowing who you would be hiring. Some key information a hiring employer should attempt to obtain includes how often and whether the competitor has filed lawsuits against former employees and/or new employers for having allegedly violated existing and valid restrictive covenants such as non-compete and non-solicit agreements. Importantly, the access and availability of such information has been made possible by the advent of electronic docket search and court-filing software and systems.
In Part XIII and our blog post titled “Hiring from Competitors – Understand the Litigiousness of the Industry,” we will conclude the series by hammering on the importance of doing thorough homework to understand how litigious the industry is, as an additional step a hiring employer may take to avoid the risk of litigation for hiring from a competitor.
In the meantime, stay tuned for more legal guidance, training, and education in other series in progress. In the interim, if there are any questions or comments, please let us know at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer & Author.