Representing an employee that is departing from a company to join an alleged
competitor can be one of the most challenging, contentious and fast-moving
situations employment lawyers handle. There are myriad interests and
considerations to evaluate and balance. For example, one of the most common
misconceptions is that, in California, employees move freely between jobs in
complete disregard of the concerns that might restrict them elsewhere. However,
even in California’s supposedly laissez-faire employment landscape, employees
who do not manage their career moves carefully can find themselves unemployed
and in legal trouble. Having legal advice early in the process can make a critical
difference and increase the chances of a smooth transition.
Consider the predicament of former “star” Uber engineer, Anthony Levandowski.
On May 30, 2017, the New York Times reported that Uber had fired Levandowski,
who was accused of stealing trade secrets from his former employer, Google.
Google sibling company, Waymo, was suing Uber, alleging among other things that
Uber was using those allegedly stolen trade secrets. The U.S. District Court for the
Northern District of California had ordered Uber not only to limit Levandowski’s
role in the company, but also to do what it could to ensure the return of Google
files. Asserting that Levandowski had not followed its instruction to assist in
complying with the court’s order, Uber terminated his employment.
To avoid litigation and minimize liability, new employers are increasingly
conditioning initial and continued employment on a “clean and complete”
departure from prior employment. For example, new employers are requiring new
employees to warrant, inter alia, that:
They have returned all property belonging to former employers, wherever and however stored;
They have and will continue to abide by restrictions contractually imposed by prior employment;
The new employees can and will perform their new jobs without violating such restrictions; and
They will not bring or use any confidential, proprietary or trade secret information belonging to
any prior employer.
Given this shifting and sharing of legal risk, it is incumbent upon lawyers representing transitioning
employees to advise their clients to take appropriate steps to protect themselves. Here are some tips on how to do this:
1. Have the clients locate and read what they have signed: Some employers require employees to sign restrictive covenant agreements, such as nondisclosure, confidentiality, noncompete and
nonsolicitation agreements. Restrictions may also be included in offer letters, employment
agreements, deferred compensation and equity plans and grants, change of control agreements,
and severance agreements.
2. Advise clients to comply with what they signed and to consult with you throughout the
transition process: Be mindful from the outset of how a client’s conduct will look to the court. If
the former employer can point to alleged violations of an agreement or other allegedly bad
conduct during or prior to the transition, it will place your client at a significant disadvantage if
litigation ensues. If your client has concerns that complying with the agreement might create an
impediment to transitioning to new employment, evaluate the agreement’s enforceability
and/or alternatives. For example, a prospective employer may ask to see the restrictive
covenant, but the confidentiality obligation prevents sharing it. Sometimes the potential
employer’s concern can be addressed and resolved by you talking to the prospective employer’s
counsel.
3. Anticipate post-departure scrutiny: Upon learning that an employee is planning to go, or has
gone, to work for a competitor, the prior employer’s typical first step will be to review the
employee’s predeparture emails and computer usage to evaluate, for example, whether the
employee attempted to gather confidential, proprietary or trade secret information in
anticipation of their departure. It is prudent to advise your clients that anything they do, take or
delete on or from a work computer, device or account will be reviewed — and that steps should
be taken to avoid problems. It is also critical to advise your client not to use the email account,
or even an email account through a computer linked to the system, of the company to
communicate with you as such communications could jeopardize the attorney-client privilege.
4. Advise your clients to take nothing/keep nothing/destroy nothing unless authorized,
preferably in writing: One of the biggest challenges for transitioning employees and their new
employers are the files, documents and other information that is stored on personal devices;
devices which the employee does not want to surrender. Downloading personal files from a
work computer to a thumb or external hard drive can give the impression to a former employer
that its proprietary information may have been taken. Employers are particularly suspicious
when a post-departure forensic review reveals downloading followed by deletion of related
material. Advise your clients early and often that, if they have stored personal information on
company devices, they may have to forego privacy concerns to satisfy the concerns of their prior
and new employers.
5. Remind clients to think before posting: One typical way that issues arise — and escalate
quickly — is when an employer learns through social media that a former employee has gone to
work for a competitor (or for who the prior employer considers a competitor) in what is
described as a potentially competitive role or a role in which confidential, proprietary or trade
secret information might be disclosed. The client should be told to keep this in mind when
deciding when and how to post about a new job. A recent decision from the U.S. District Court
for the District of Minnesota highlights this concern. In Mobile Mini Inc. v. Liz Veleza, et al., Civil
No. 17-1684, Mobile Mini sued and sought injunctive relief against both a former employee and
her new employer. Relying on the language of the former employee’s LinkedIn posts, the court
agreed with Mini Mobile that the former employee had more than likely violated a
nonsolicitation clause that forbade her from “directly or indirectly soliciting Company Customers
….” The court, despite acknowledging it had seen no evidence that the former employee had
actually taken any customers from, or caused any monetary damages to, her former employer,
granted a preliminary injunction requiring, among other things, that the former employee to
take down the offending posts.
6. Advise clients to contact you immediately if issues arise after new employment begins, and to avoid the temptation to bury their heads in the sand or, worse, to implement self-help
remedies: Issues almost always arise. They may be awkward but minor, such as a colleague
innocently including your client on an email chain; or they may be major, such as your clients
realizing that they inadvertently retained trade secret information. Navigating these issues is
situation-specific, and your clients will be well-served by your early involvement.