When hiring, employers are eager to train and nurture a new employee, integrating them into their organization. New employees commonly start with some skills and abilities, but without the real keys to success: The employer introduces them to its arsenal of products, practices, and most important, its clients and trusted vendors.
Employers should safeguard their years of research, experience, and investment. In short, they should safeguard their legally protected interests. They can do this, either at the time of hire or at some subsequent point during an employee’s tenure, through the use of post-termination restrictive covenants.
A confidentiality provision ensures that an employer’s secrets stay secret. Almost every business these days has proprietary information, such as client lists, business methods, or document templates. An employer must be able to divulge this information to an employee without worrying that the employee will walk out the door with it.
A noncompetition clause prohibits employees from engaging in certain work within a specified geographic region for a limited period of time following the end of their employment. These clauses level the playing field, permitting an employer to replace a departing employee without interference from the departing employee for a limited time.
A nonsolicitation clause prohibits employees from calling upon or accepting business from the employer’s clients. Many employees are introduced to clients by the employer and build relationships with them based on that introduction. As long as the employee stays with the employer, this benefits the employer and the employee, for whom it opens up advancement potential. Too often, an employer places an employee in a position of trust and confidence, only to have that employee then raid the employer’s assets upon departure.
An antipiracy clause prohibits former employees from hiring away current employees of the employer. In addition to relationships with clients, employees build relationships with each other. A former employee knows which of his or her former coworkers would be a good hire and who would not as a result of being in a position of trust and confidence. Without an antipiracy clause, a departing employee can lure away an employer’s top talent.
At the commencement of the workplace relationship, the consideration for post-termination restrictions is the offer of employment itself. Subsequent to hiring, after an employer introduces an employee to information, personnel, and other valuable assets, the employer may wish to then create a restrictive covenant. In that circumstance, there may be a need for additional consideration to enforce the restrictive covenant. This could take the form of a raise, bonus eligibility, or a promotion.
Beyond these contractual measures, state statutes and case law provide protection for trade secrets. Connecticut General Statutes, Sec. 35-50, et seq. provides a statutory remedy for misappropriation of trade secrets in Connecticut in keeping with the Uniform Trade Secrets Act. New York and Massachusetts do not have statutes in place, but their courts have developed a significant volume of case law using the Restatement (Second) of Torts as a model for a misappropriation of trade secrets cause of action. Rhode Island, like Connecticut, has codified the Uniform Trade Secrets Act at Rhode Island General Laws, Sec. 6-41-1 et seq.
Having invested in a successful business, it is necessary to protect employer assets. It would be a shame to invest in a building without locks on the doors. By the same token, it is a shame to invest in personnel without restrictive covenants in place.
Glenn A. Duhl is a management-side employment and litigation lawyer at Zangari Cohn Cuthbertson Duhl & Grello P.C. Please visit www.zcclawfirm.com.
The information contained in this article is general in nature and offered for informational purposes only. It is not offered and should not be construed as legal advice.
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