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They’re Leaving For a Competitor. Now What Do You Do?

Resources & Self-Education   |   Thursday, August 16, 2018

This is the 3rd in a series of three articles on employee mobility:

Article 1 - Frontal Lobotomies and Employee Mobility in California, California Trade Secrets & Inevitable Disclosure;
Article 2 - Best Practices Before An Employee Leaves For A Competitor;
Article 3 - They’re Leaving For a Competitor. Now What Do You Do?

Your star employee informed you at 8:00 a.m. that she’s leaving for a competitor. First, let the shock of it sink in, then let it go. You take a breath, walk to the coffee shop and walk back to your desk. Thoughts race. Now what?

“My co-founder isn’t ready to hear this,” you think. “I’m not ready either. We’re making a strategic product announcement in 30 days … the biggest announcement in our company history. And, she’s the project manager. Everyone else on the team is too green to replace her.”

Well, it’s time to take a look at your trade secrets and confidential information - policies, NDA’s, notes from conversations, and previous updates to company trade secret policies.

Unfortunately, there are big gaps, gaping holes in fact, where you could have been more vigilant about setting up company policies on trade secret protections.

In this case, your star employee has been involved in all sorts of technical secrets and company confidential information that went beyond her job responsibilities. And, what about all those passwords to databases, sales contacts, and company confidential meeting notes - Board meetings too? She’s been a cross-functional manager for two years, fulfilling multiple duties.

Your worst nightmare might be coming true.

There are several things you can do immediately.

Find out where she’s going to work and what her job title and duties will be. This will help you determine your trade secret risk level.

If she wants to stay on for the next two weeks, and if you need her to stay, be sure to limit and restrict her access to key systems. You have to establish the boundaries of her access. If she’s continuing as project manager, she’ll have to access a lot of key information right up to her departure. Remind her - in writing - of her legal responsibility to maintain confidentiality. In many cases, despite the need, a full lockout of company systems is the best practice. Additionally, write a letter to her new employer informing them of her responsibility to maintain confidentiality.

Immediately review and update your confidentiality agreements. If she refuses to sign a new confidentiality agreement upon exit, then be sure to inform your legal team.

Review log data to find out if there has been any activity where she recently downloaded large files to external drives or laptops. Review her recent use of company email systems where she might have emailed large files and deleted them from the sent folder.

In some cases, it is advisable immediately to confiscate the employee laptop and other devices. It depends on how you define job responsibilities for the remainder of her employment.

You can also monitor her Linkedin activity. But, you cannot access her personal accounts with passwords cached in the employee’s browsers. Employees are protected under certain privacy laws.

Our Crisis Response Checklist provides a complete summary of steps you must take to protect your company data. Please click here to download it.

We advise on all aspects of setting up programs to protect against trade secret misappropriation. And, we can assist you with an employee resignation - before, during, and after they leave.

Please feel free to contact me. I look forward to assisting you with this highly strategic area of your business, where great value cane be protected, or lost, depending on your actions.

This entry was posted on Thursday, August 16, 2018 and is filed under Resources & Self-Education, Internet Law News.

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