Category Archives: hiring

Exit Stage Left –Tips for When a Key Employee Moves to a Competitor

 Contributed by Michael J. Faley, February 27, 2019

As with most things in life, you should hope for the best, but plan for the worst in the event that a valued employee leaves to join a competitor. This post contains some helpful tips to keep in mind following such a move by a key employee.

I.   Stay On Good Terms With The Former Employee Whenever Possible

Once your employee announces that he or she is making the jump to a competitor, ending the relationship on amicable terms can benefit you down the road. It may very well turn out that the employee’s experience and knowledge of past or ongoing projects become critical to the resolution of a future problem or dispute. For that reason, among many others, it is better to remain civil despite the negative feelings that frequently percolate in these kinds of situations.

II.   Take Action When Things Get Ugly

Of course, though you may try, it is not always possible to maintain an amicable relationship with a former employee. Most of the time, you will simply move on with business as usual. Unfortunately, it is not uncommon that a former employee attempts to pack up and take your business to the new company. This frequently takes the form of a soon-to-be former employee copying documents and computer files containing the likes of confidential client information or records concerning former and ongoing projects. If this occurs to you, it is time for action. 

The law provides you with several methods of redress to prevent other businesses from obtaining an unfair competitive advantage where a former employee has taken proprietary information. Here are some of the most common lines of defense.

  • A Well Drafted Employment Agreement
employment contract document form with pen

An artfully crafted employment agreement with a covenant not to compete can provide the basis for a breach of contract claim against the former employee. Many employment agreements also prohibit solicitation of clients or taking confidential information. An effective employment agreement is a great tool to prevent a former employee from unfairly poaching your business.

  • The Duty of Loyalty

When it comes to high-ranking employees, always remember that the soon-to-be ex-employee has a continuing duty of loyalty while working for your company. Almost certainly, the former employee will have breached that duty if he or she surreptitiously copied confidential records and computer files during employment.

  • Trade Secret Laws

It is also illegal to misappropriate trade secrets. For instance, the Illinois Trade Secrets Act (765 ILCS 1065/2) makes it unlawful for the former employee or their new company to misappropriate your “technical” information, “data,” “methods,” “techniques,” “drawings,” and other confidential information that are sufficiently secret to give you a competitive advantage.

  • Copyright Laws

Copyright laws may further help to protect your business interests. Copyright tends to be particularly important for businesses involved in artistic endeavors, architecture, and software development among many other fields that produce original works of authorship. Usually, the underlying copyright in any work generated for your company by the employee within the scope of his employment will belong to the company. Such laws can, for example, help stop a former employee from taking copyrighted project plans and using them to replace you on a client’s project or passing off the material in a portfolio as their own. Because registration of the work with the U.S. Copyright Office (www.copyright.gov) is required to file a lawsuit for infringement, see 17 U.S.C. § 411(a), and because registration also provides the opportunity for statutory damages and attorneys’ fees, we recommend registering the copyright in your valuable works and include copyright notice on each of the works involved (e.g., for works first published in 2019, acceptable copyright notice would read “©2019″).

  • Computer Records

Finally, the federal Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C.A. §1030, is a vital law that protects you from theft and destruction of information stored on your company’s computer system. In the event your company sustains damage or loss due to a CFAA violation, you may be able to maintain a lawsuit to prohibit the former employee from using the illegally obtained computer files. Damages may also be available under the CFAA. As a measure of cautious practice, you should have your information technology staff check all computer systems after the employee departs.

Through the use of the foregoing business and legal tools, you should be able to protect your business interests in the event those interests are threatened by illicit means. Your attorney will usually start by writing your former employee and/or the new company a “cease-and-desist letter.” However, depending on the urgency of the matter, events may require an immediate lawsuit to enjoin the former employee and/or their new employer from acting in a way detrimental to your interests.

III.           Remember the Flip Side When You Are Hiring

Similar concerns exist when you are on the hunt for new talent. Regarding the recruitment process, you should always:

· Remember that the employee owes a continuing duty of loyalty to his or her current employer for the entire duration of employment.

· Inquire whether the prospective employee may be subject to any post-employment restrictions contained in an employment agreement.

· Take the time to understand whose rights may be implicated by any potentially proprietary information gleaned from the new employee, and refrain from acting upon questionable information.

In short, while a valuable new employee can certainly lead to new business opportunities for your company, you should always act carefully to avoid potential exposure to the types of litigation discussed above. 

Job Posting and Ban the Box

Contributed by Mike Wong, February 18, 2019

job application on a laptop screen

Over 33 states and 150 cities, counties and municipalities have enacted Ban-the Box laws that prohibit employers from asking about an applicant’s criminal record or criminal history prior to the applicant being selected for an interview or, if there is no interview, prior to a conditional offer of employment.

But did you know that Ban-the-Box laws can also impact your job posting or advertisement?

Yes, these laws can, and much like the Fair Credit Reporting Act (FCRA) and Americans with Disabilities Act (ADA), Ban the Box laws are being used by “professional plaintiffs” to go after employers for technical violations.

For example, New Jersey, New York City, Washington and Wisconsin’s Ban the Box laws specifically prohibit employers from asking applicants about their criminal history before making a job offer – including in job postings.  In those jurisdictions, having job postings or advertisements that state: “background check is required,” “clean criminal history,” “no felons,” “no criminal background,” or any other language that expresses any limitation in the hiring of an individual, directly or indirectly, based on his or her arrest or criminal background violate the law.

While the majority of Ban the Box laws do not expressly include prohibitions of such language in job postings and advertisements, employers now have potential exposure if they decide to include language of that kind. For example, an applicant could argue that while a state or local law does not expressly prohibit using language regarding criminal history in a job positing or advertisement, by doing so the employer is, in essence, unlawfully seeking criminal history information from job candidates. Additionally, if the state or local law prohibits discrimination against individuals with arrest records, the same legal argument the EEOC uses for Title VII discrimination claims based on arrests or convictions could be used – i.e., that the use of arrest records has a disparate impact on individuals of certain protected classes by eliminating, for example, more African American or Hispanic applicants as compared to applicants outside those groups.

Thus, while Ban the Box seems pretty straightforward, it is important to understand the details of each state and local law that may apply to your business. Moreover, it is important to review you job postings, advertisements and recruiting materials to make sure that they are up to date and not creating potential liability for you.

Seventh Circuit’s Rejection of Applicant’s Age Claim Does Not Mean Employers Are Off The Hook

Contributed by Noah A. Frank, February 11, 2019

book with chapter age discrimination and a gavel

On January 23, 2019, an en banc panel of the 7th Circuit Court of Appeals held that the Age Discrimination in Employment Act’s (ADEA) disparate impact protections do not apply to job applicants.    

By way of background, 58-year-old Dale Kleber applied for CareFusion’s posting seeking an attorney with “3 to 7 years (no more than 7 years) of relevant legal experience.” Kleber had more experience than that, but instead of hiring Kleber, CareFusion hired a 29-year-old within the given experience range. There are a few key takeaways from this decision:

First, an en banc decision means that all of the circuit’s judges that want to participate are able to consider the merits of the case. This is a sort of intermediary stage between the appellate court’s typical review of a case and the Supreme Court, and here it signals that the Seventh Circuit determined that significant legal issues were at stake. It does not, however, mean that the judges all came to the same conclusion.  Here, 12 of 14 judges participated in the en banc panel, and decided the case 8-to-4, reversing the initial 3-judge panel’s decision (that was decided 2-1) and affirming the trial court’s dismissal of the claim. 

Second, the holding is only as to disparate impact (i.e., facially neutral policies or conduct that have a negative consequence) claims for job applicants under the federal ADEA. ADEA’s disparate impact protections remain in place for current employees, and this does not eliminate any cause of action which may exist under state and local age discrimination laws!

Third, the court clearly stated that ADEA protects both applicants and employees from disparate treatment – e.g., intentional conduct based on age where the affected individual is 40-or-over. This means that advertising specifically seeking someone under the age of 40 (unless there is a bona fide occupational qualification (“BFOQ”) – a lesson for another day) will still likely run afoul of the law.

To avoid potentially violating ADEA in the application phase of employment, employers should take a few proactive measures. First, audit job postings and descriptions to ensure they are age-neutral unless an actual BFOQ exists. Second, update application forms to eliminate requests for birthdays and graduation/degree years (which tend to give a strong indication of age). Third, train anyone involved in the interviewing process on unlawful inquiries – not solely limited to age. And of course, seek the advice of legal counsel to avoid responding to charges of discrimination and even “professional plaintiff job applicants” claims.