Why is it important for employers to understand restrictive covenants in the Life Sciences Industry? In order to prohibit the use of proprietary information to the benefit of employees, employers often execute restrictive covenants and, consequently, protect their trade secrets. Through restrictive covenants, employees are prohibited and discouraged from engaging in activities that might harm former employers, such as competing against and/or stealing/soliciting clients. When it is deemed a “restraint on trade,” a restrictive covenant is considered to be invalid. For this reason, while they will at times attempt to strike some terms (the blue pencil rule) or even modify them (equitable information) as a way of limiting their scope, courts have shown reluctance in enforcing broad restrictive covenants.
As a continuation of our discussion, this blog post is an overview of issues employers within the life sciences industry should consider when screening and hiring potential candidates.
Pre-employment Screening of Candidates in the Life Sciences Industry
Like in any other industry, there are various issues related to the pre-employment screening of candidates seeking to secure jobs within the life sciences industry. As we have mentioned in our past blog post under this series, this industry is highly regulated, and additional personnel are needed to supplement the existing workforce. For these reasons, the industry experiences frequent seasons of hiring and screening. Accordingly, while employers should be proactively wary of them, many issues are bound to arise in the pre-employment screening process. Some of the typical categories where these issues may arise include, but are not limited to, (1) applications for jobs and imply risks of contracts, (2) reference and background checks, (3) inquiries and testing during pre-employment, and (4) onboarding of new employees.
In addition to considering these issues keenly, employers within this industry should also ensure that interviewers are aware that only business-related information (i.e., limited to key details required to determine a candidate’s qualifications for the position) should be requested and obtained during interviews. Importantly, employers must be proactively conversant with jurisdictional laws and regulations regarding interviews and the interviewing process. For instance, asking interviewers questions related to their criminal, pay, and/or salary histories has been banned in a growing number of states.
This implies that, as a critical step in preparing how to carry out pre-employment screening of candidates, employers must be compliant with local and state laws regulating how hiring and screening are conducted in the life sciences industry. For instance, while noncompliance could lead to potential class liabilities, a number of federal statutes, such as the FCRA (Fair Credit Reporting Act), can be challenging to negate and navigate once an employer finds itself on the wrong side of the statute. Additionally, other jurisdictional laws regulating demonstrations of drug testing and job-related functions should be critically taken into account because running afoul of them could also push the employer involved into a murk of class liabilities.
In Part XV of this series and our blog post titled “Avoiding Liability During Hiring in the Life Sciences Industry,” we shall move the discussion forward by hammering on the steps employers within the life sciences industry should take to avoid liability during the process of screening and hiring potential candidates.
In the meantime, stay tuned for more legal guidance, training, and education. 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.