More businesses are requiring their employees who regularly work with customers or who possess certain types of sensitive information to sign some form of contract restricting the employee’s ability to engage in competitive activity once the employment terminates.
I have discussed these types of agreements in several previous posts.
- Employee Beware: Understand Your Rights Before Signing or Litigating a Non-Competition Agreement or Other Employment Contract (January 26, 2017)
- Many States and Now the Federal Government Are Questioning Use of Overreaching Non-Compete Agreements (May 13, 2016)
- Employee Non-Competition Agreements Part 3: You Mean They Can Stop Me from Working? (June 30, 2015)
- Employee Non-Competition Agreements Part 2: The Employer's Perspective (June 17, 2015)
- Employee Non-Competition Agreements Part 1: The Basics (May 21, 2015)
The most common restrictions fall into three categories. The first is the non-competition agreement (a/k/a “Non-Compete”), which prohibits the departing employee from engaging in any manner of competition either on his own or as an employee of another for a defined period of time. The second is a customer non-solicitation agreement, which precludes the departing employee from communicating with the employer’s customers for a competitive business purpose for a defined period of time. The third is an employee non-solicitation agreement, which prohibits the departing employee from enticing his former co-workers to leave their employment (generally, in an effort to recruit them to the new employer). Disputes that arise under these agreements tend to be complicated and oftentimes intense. It consequently should be no surprise that whenever a former team member departs and is perceived as trying to take customers or co-workers with him, feelings get set on edge.
The rise of social media has had the effect of compounding this tension between employers and their former employees who are subject to contractual restrictions on their ability to compete. Social media platforms such as Facebook and LinkedIn are an instant means of notifying any number of individuals with whom you are acquainted or may have worked of any number of life changes, including those that are work related. One issue employment lawyers now see on a fairly regular basis is whether a former employee’s “status” communications on social media are nothing more than innocuous life updates, or subtle efforts to circumvent contractual restrictions and “poach” customers or employees.
One recent decision by an Illinois appellate court emphasizes how social media participation by former employees subject to post-employment contractual restrictions can lead to claims of their breach and costly litigation. In Bankers Life & Casualty, Co. v. American Senior Benefits, LLC, 2017 Ill. App. LEXIS 511 (August 17, 2017), a former sales manager with Bankers Life accepted a new position with one of its competitors. After starting in that new position, the employee sent an e-mail notification through his LinkedIn account to a number of his former co-workers at Bankers Life asking them to accept a professional connection. Bankers Life thereafter accused the former employee of attempting to recruit its current employees to open positions with the competitor, which, if true, constituted a violation of the employee non-solicitation provision the employee signed while with Bankers Life.
The Illinois appellate court found that the former employee was not engaged in solicitation simply by attempting to make professional connections via LinkedIn. The Court noted that when the content and substance of social media communication simply provides information about a change in employment, identifies the new employer, and provides a description of the employee’s new job duties, the use of social media should not be considered impermissible “solicitation.” The Court made certain to point out, however, a number of other Court holdings in which the former employee’s social media efforts crossed the line between providing updated information and inappropriate solicitation. The examples offered by the Court included sending e-mails through LinkedIn or Facebook to targeted individuals asking them to consider employment with the new employer, and criticizing the former employer in an effort to cause its employees or customers to terminate their current relationship with the former employer.
My regular advice to subsequent employers of people who are subject to contractual restrictions on their work activities is that your goal should not be to “win the fight,” but to avoid the fight in the first place. While “winning” is good, it often comes with a significant legal expense. The best means of avoiding the fight is through a series of simple preventative steps undertaken before ever hiring the individual under consideration. These include (1) asking the employee if he ever signed any form of non-competition or non-solicitation agreement; (2) obtaining a copy of that agreement; (3) having the agreement reviewed by legal counsel, and (4) imposing appropriate restrictions on the new employee’s activities in order to prevent claims of contract breach against the employee and contract interference by the new employer. Part of this process should also include a discussion, followed by a clear understanding with the new employee concerning appropriate and inappropriate activities on social media platforms such as LinkedIn or Facebook.
If you are an employee subject to such contractual restrictions and about to accept new employment, I urge preventative caution on your part as well. It is not your new employer’s job to take care of the problem. In some instances, failure on your part to communicate the fact of your contractual limitations to your new employer, or failing to abide by those restrictions in your new employment may cause you to lose your new job very quickly. Thus, when discussing potential new employment I encourage employees to abide by a similar checklist, which includes (1) informing the prospective employer of your contractual limitations; (2) providing a copy of the document imposing those restrictions (do not wait for a request); and (3) discussing what limitations need to be placed on your activities to prevent a claim of breach, including marketing efforts by you and your new employer on social media.
If you would like to speak to John Lawhorn on this or any other matter, he may be reached at (865) 546-9321.