The five pitfalls employers should avoid when leaving employees | Arent Fox Schiff

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The five pitfalls employers should avoid when leaving employees | Arent Fox Schiff
The five pitfalls employers should avoid when leaving employees | Arent Fox Schiff


In today’s competitive job market, employee turnover is reaching near record levels. Whether a separation is voluntary or involuntary, employee layoffs often happen quickly and involve many moving parts. To protect the company and improve the enforceability of any restrictive covenants after leaving, employers should make sure they avoid these common pitfalls when leaving their employees.

1. Skipping the exit interview.

With all the moving parts and administrative requirements for leaving an employee, employers may be tempted to skip the exit interview and just move on. However, exit interviews can be useful risk mitigation tools for the employer. The exit interview is an important opportunity to remind the departing employee of his current obligations to the company, take stock of the devices and accounts the employee must leave behind upon leaving, and have him sign a reaffirmation of the terms of the restrictive covenant agreement, according to Applicable legislation.

The employer can also find out details about where the employee intends to work next and in what capacity. If an employee is forthcoming, the employer will be in a position to make an informed decision about post-employment restrictions. If, on the other hand, an employee is evasive, this may prompt the employer to investigate further. Either way, this information can be critical to enforcing any restrictive covenants that bind the employee after termination.

2. Absence of a requirement to return information about the company.

As the workforce becomes increasingly remote, it can be more difficult than ever to ensure that all company information is returned. Gone are the days when employers could just send an employee out the door, leaving all company information safely in the office. Instead, information lives in home offices, cloud platforms, personal devices, and other hard-to-trace locations.

Therefore, it is critical to protect a company’s trade secrets and other intellectual property to act quickly to remove a departing employee’s access to any company systems, such as email, document storage, or cloud-based platforms. Similarly, employers must require, by policy and practice, that any physical information in the employee’s possession be promptly returned, including paper documents, computers, and external storage devices. As it may not be possible to physically observe the employee in the time leading up to their departure, employers may consider requiring employees to certify that they have returned, rather than retained, copies of all company information.

3. Failure to comply with the state requirements for imposing a ban on competition.

If the departing employee plans to join a competitor, and even if the departing employee indicates that they are not, employers should be careful to ensure that they comply with state-specific requirements related to their post-separation restrictive covenants. For example, employees in Massachusetts may be bound by a non-compete clause only if they are terminated for cause or voluntarily leave, and employers should pay particular attention to the compensation requirements. In Illinois, employees cannot be bound by a non-compete unless they have received adequate consideration or have been employed by the company for at least two years. Oregon employees must be given a copy of their signed, written non-compete agreement within 30 days of termination to be bound by its restrictions.

Because the non-compete environment is in a state of near-constant flux at the local, state, and federal levels, it is prudent for an employer to contact experienced employment counsel when terminating an employee with a pre-existing disability.

4. Immediate deletion of an employee’s company-issued devices.

Employers may be tempted to take the assets previously assigned to a departing employee, immediately reset them and reissue them to another employee. While this can be cost-effective, it can also result in the loss of important forensic data if there is later concern about misappropriation, theft or use of company data by a former employer after they leave. This type of forensic information often proves invaluable to an employer trying to meet the burden of proof for a temporary restraining order or preliminary injunction against a departing employee.

Employers should consider implementing a policy whereby devices and accounts are maintained for a period of time after termination before being reset or reissued, or at least consider retaining these sources of evidence for employees whose departures are accompanied by red flags. flags indicating risk of misconduct.

5. Lack of moving quickly to evaluate strategy.

If an employer has concerns about the departing employee’s intentions, time is of the essence. In assessing whether an employer can prevent a former employer from working for a competitor, for example, a court will consider whether the employer has shown that failure to enjoin such conduct would cause irreparable harm to the employer. Delay often makes this claim more difficult to prove.

Employers must therefore quickly assess the situation to determine next steps. Experienced outside counsel can help with the analysis and provide guidance on how to approach the situation. For example, a reminder letter or a more strongly worded cease and desist letter may be reasonable. It may also make sense to perform a forensic analysis of the departing employee’s devices and accounts. Finally, it may be necessary to protect the interests of the company by filing a lawsuit. But simply ignoring a potential breakout is rarely the right strategy. Delays can limit the employer’s options and undermine the employer’s legal remedies.

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