Protecting Against Employee Raiding
Employee raiding is on the rise. A growing shortage of talented workers means companies are looking to raid employees, rather than recruit employees. What have you done to minimize the damage if a competitor engages in employee raiding and steals your employees? This article by attorney Jim Komie of Schuyler, Roche & Zwirner, P.C. provides excellent advice on how to mitigate the risks of employee raids.
It is one of the biggest challenges facing business owners today. You hire
an employee with little or no experience. You devote significant
time and money to training him.
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You introduce him to your customers and give him resources to develop
new customers for your company. Slowly but surely, the employee
starts to become profitable.
That's when it happens. Late Friday afternoon, your new superstar hands you a letter of resignation. He is joining your main competitor.
You soon learn that he is contacting the customers he got to know while working for you. Customers begin to follow him to the new employer, including some of your best and oldest customers.
You are a victim of employee raiding. How could you have protected yourself from this worst case scenario? What can be done to mitigate the adverse consequences of employee raiding?
What You Can Do Now to Protect Your Company
When it comes to defending against employee raiding, an ounce of prevention is worth a pound of cure. There are a variety of things you can do today to improve your business's readiness to defend its competitive position in such a situation.
- Implement Or Update Your Non-Competes. If you have
not had your employees sign non-competes, you should consider
doing so immediately. Even if you have had your employees sign
noncompetes, you may want to have the noncompete agreement reviewed
to determine its enforceability. You may learn that your agreement
is outdated or that it is so broad and overreaching that a court
may refuse to enforce it.
Having your employees sign new or updated non-compete agreements
can have a variety of benefits. It should give your business a
powerful weapon in the event an employee leaves and begins competing
against you unfairly. Also, having your employees sign new or
updated non-competes can have a significant deterrent effect.
An employee who has just signed a non-compete may think twice
about taking a customer list.
- Improve Record-Keeping. You should
keep all non-compete agreements in an easily accessible place.
An employee's personnel file is as good a place as any. It is
also a good idea to have multiple copies of each employee's non-compete
agreement and keep them in different places. In some extreme cases,
employees have pulled their personnel files and destroyed the
copy of their contract.
You should also do a quick review of your files to confirm that
you in fact have a signed non-compete agreement from each employee.
It is not uncommon for employees to slip through the cracks. For
example, some employees say they want to review the agreement
and then fail to return a signed copy. There is nothing worse
than finding out after an employee has left that he never returned
a signed copy of his non-compete agreement.
- Tighten Security. One factor that courts look at in
evaluating whether to enforce a restriction on an ex-employee's
use of customer information is the steps that the employer has
taken to protect the confidentiality of its customer information.
You should therefore consider implementing certain measures to
tighten the security of your customer information. You may want
to require that customer information be kept under lock and key
when not being used.
Confidential information should be labeled as such. You may want
to permit employees to have access to customer information only
on an "as needed" basis. Any such measures should include a device
(such as a password) to restrict access to any customer information
maintained on your computer system.
Article provided by attorney
Jim Komie of Schuyler, Roche & Zwirner, P.C. Jim has a wide
variety of experience in commercial litigation, with an emphasis
on employment litigation and counseling. Jim can be reached at 312
565.8352 or via e-mail at jkomie@srzlaw.com.
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