The breach of restrictive covenants claim is one of the most common law contract claims brought by employers against employees who have engaged in the misappropriation of trade secrets and/or confidential information. Employers should, therefore, assert a breach of contract claim in a complaint against a departing employee who, while still subject to one or more restrictive covenants, such as non-compete or non-solicit agreements, concerning using the former employer’s privileged information, engaged in unlawful theft, misappropriation, and/or use of such trade secrets and confidential information.
At this point, we now shift our focus to the concept of “employee raiding” and how it can be prevented to protect trade secrets in our blog post titled “Preventing Employee Raiding to Protect Trade Secrets” and Part XVII of our series.
Preventing Employee Raiding to Protect Trade Secrets
In business, while the primary intention is to acquire the confidential information known by employees, employee raiding refers to the practice where employees are unlawfully induced to leave one employer and accept employment with another employer (most likely a competitor to the other). In today’s competitive world, while it serves as a notable challenge to employers who wish to protect their confidential information and/or trade secrets, it is impossible to prevent employee raiding entirely. This means that to protect trade secrets and/or confidential information and retain employees, employers should take and implement measures and policies that would help curb employee raiding. Such measures and policies include, but are not limited to:
- Implementing an electronic communication policy stating that the employer reserves the right of accessing, inspecting, copying, and confiscating any type of communications (including text messages and voicemails) on devices supported by or connected to the employer’s IT infrastructure. In the case that the employer takes legal action following an incident of employee raiding, then such access could provide valuable evidence for presenting in court.
- Creating policies that employee bonuses should be paid at the end of the year (instead of on a monthly basis) or that bonuses would be paid but only if the employee remains employed at the time of payment. Such policies would serve as incentives to keep the employee(s) until the payment time of the bonus.
- Including, in the employee handbook, a policy indicating that employees are expected to inform and disclose employment offers or any form of solicitation by the employer’s competitor(s).
- Implementing measures extending the duration of standard notice for all employees working under contract or still subject to non-at-will employment covenants. Such measures would make employees less attractive to a recruiter or competitor.
- Entering into non-solicit, non-disclosure, non-compete covenants, and other restrictive agreements with employees at the point of employment. This would discourage employees exposed to or holding trade secrets and/or confidential information from breaching restrictive covenants or such agreements for a reasonable duration following the expiration of a contract or before such a contract expires.
In Part XVIII of this series, we will move the discussion forward by hammering on the concept of “no-hire agreements” and how it could be used to prohibit employee raiding and, thus, prevent the theft and misappropriation of trade secrets and confidential information in our blog post titled “Preventing Employee Raiding Through “No-Hire Agreements.””
Until then, stay tuned for more education, training, and legal guidance. In the interim, reach out to us with questions and/or comments on our website at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer, Author, & Publisher.