Moving from one employer to another is often an exciting time for many employees. The last thing most employees need when joining a new employer or starting their own business, however, is a costly lawsuit initiated by their former employer. The risk of such litigation is greater than most employees probably imagine, especially for high level executives, professionals, and salespersons. Employees, however, can take several steps to make the transition go smoothly and minimize the risk of litigation with their former employer. This article discusses some strategies that executives, professionals, and salespersons can use to minimize the risk of a lawsuit alleging breach of a non-compete agreement, breach of the employee’s duty of loyalty, improper disclosure of confidential information, and misappropriation of trade secrets when departing an employer to join a competitor or start their own business.
Litigation Risks for Executives When Leaving a Company
Employees face several risks of litigation when leaving a company. These risks are heightened if the employee is joining a competitor, plans to start their own competing business, intends to call on their former employer’s customers, or wants to hire individuals from their former employer’s workforce.
The first category of risks involves breach of contract. For example, the employee might have signed an employment agreement that requires the employee to provide advance notice prior to resigning. The employee might have agreed to return the employer’s property on or before the last day of employment. Most importantly, the employee might have signed non-disclosure, non-solicitation, non-competition, or other “restrictive covenants” that continue following the end of the employment relationship. Often, these restrictive covenants apply even if the employee was terminated. And contrary to popular belief, many of these restrictive covenants are enforceable.
The second category of risks involves non-contractual duties that all employees owe their employers within the State of Minnesota. For example, all employees owe a duty of loyalty to their employer while they are employed. Among other things, this duty of loyalty prohibits employees (while they are still employed) from competing against their employer, soliciting their employer’s customers, or recruiting their employer’s workforce to leave the organization. These obligations exist even if the employee has not signed a written non-competition agreement. Employees in Minnesota also have a common law duty not to use or disclose their employer’s confidential information (i.e., information the employee knew or should have known was considered confidential by their employer). Finally, employees have a duty under the Minnesota Uniform Trade Secrets Act not to misappropriate their employer’s trade secrets. The duties to protect the employer’s confidential information and trade secrets continue following the end of the employment relationship and do not depend upon the existence of a contract signed by the employee.
The third category of risks involves high level executives, directors, and shareholders. For example, officers and directors of a corporation have fiduciary duties to their employer (such as the duty of full disclosure and the duty not to usurp corporate opportunities). Shareholders of a closely held Minnesota corporation or LLC may also have fiduciary duties to their other shareholders. If the officer, director, or shareholder is actively planning to join a competitor or start a competing business while still affiliated with their employer, special risks often arise.
Recommendations for Minimizing the Risks of Litigation
If you are an executive, professional, salesperson, or other employee planning to leave your employer, you can take steps to minimize the risk of a lawsuit by your former employer regarding your departure and your anticipated new employment. While you may not be legally required to take all of these steps, attempting to comply with these guidelines may substantially reduce the risk of getting sued by your former employer regardless of the theory alleged.
- Identify Governing Contracts. You should identify and obtain copies of all of your contractual obligations to your employer before your last day of employment (or as soon as possible following your departure). This may sound elementary, but many employees forget that they have signed non-competition agreements during their careers and/or do not possess copies of their relevant employment agreements. In other cases, the employee may have signed multiple agreements over many years that may impose conflicting or differing obligations. The employee must identify all of these agreements as soon as possible in order to minimize the risk of breaching these agreements. Under the Minnesota Personnel Records Act, employees can request access to their personnel record. While the Act does not explicitly identify employment agreements and non-competition agreements as part of the “personnel record,” most employers will furnish the employee with such agreements. Thus, if possible, ensure that you have copies of all offer letters, employment agreements, non-compete agreements, non-solicitation agreements, non-disclosure agreements, company policies regarding confidentiality and trade secrets, the company’s code of ethics, the company’s employee handbook, and other documents that describe your obligation(s) to protect the company’s confidential information and/or not to compete against the company.
- Obtain Legal Advice Before You Quit. If you are subject to a written non-disclosure, non-solicitation, or non-competition agreement, you should seek legal advice before you tender your resignation or accept another job in the same industry. The laws governing the enforceability of non-compete agreements are complex, nuanced, and vary from jurisdiction to jurisdiction. The enforceability of your non-compete agreement may depend upon many factors such as the timing of when you received the agreement, whether you received anything extra from your employer for signing the agreement (e.g., bonus or promotion), the scope of the restrictions contained in your agreement, whether your agreement contains a “choice of law” clause, and whether your new job is in another state. The time to obtain a legal opinion regarding your non-compete agreement is before you quit, so that you can properly understand your risks and plan accordingly.
- Comply With Your Contractual Notice Provisions and Other Requirements. If your employment contract requires you to provide advance notice of your resignation, or resign only for certain stated reasons, you should carefully comply with all of your obligations. Among other things, this means providing proper written notice and following the provisions of your contract governing how notices must be given (e.g., hand delivery, certified mail, etc.). Further, with proper planning, you might be able to maximize your eligibility for receiving severance pay, post-employment bonuses and commissions, stock options, or other compensation. Oftentimes, employment contracts, commission plans, bonus plans, and stock options will require the employee to provide advance notice of resignation or be employed on a specific date (e.g., December 31st or the last day of the fiscal quarter or year) in order to receive certain benefits.
- Follow the “Golden Rule.” You should treat your employer fairly, honestly, and openly at all times leading up to your departure even if you are frustrated or upset. A court will be less sympathetic to you if it appears that you have acted unreasonably or dishonestly. Many employees are tempted to lie about whether they are planning to join a competitor. This deception will often back-fire and will be used against you if litigation ensues. Although you are not required to notify your employer of your future plans (unless your employment contract requires such disclosure), often the best strategy involves voluntarily notifying your employer of your competitive plans and trying to proactively address any concerns of the former employer.
- Provide Advance Notice of Your Resignation. To the extent possible, you should provide your employer with adequate advance notice of your resignation. Give the company a reasonable amount of time (generally, at least two weeks but ideally more if you are in a high-level position) to find and train a replacement. Ideally, indicate that you are willing stay on until the company has been able to find an adequate replacement for you. If it appears that you are ambushing your employer by suddenly resigning, going into competition, and soliciting your employer’s workforce or customers, a court is far more likely to consider issuing a Temporary Restraining Order (TRO) or other injunctive relief against you.
- Complete Your Assignments Prior to Resigning. Prior to tendering your resignation, you should do your best to get caught up with your work and complete all outstanding projects in a professional manner. Prepare a written memo to your employer explaining the status of any pending projects, and be prepared to fully cooperate with your employer to complete all pending work, or transition the work to another employee, prior to your last day of employment. Even though you may be psychologically focusing on your new job, one of the best ways to avoid a lawsuit is to leave your old job on a positive note and ensure that your employer is not “left in the lurch.” This may reduce your employer’s suspicions about your departure and potential motivation to sue you. Moreover, if your employer does sue you, a court will be much more sympathetic to your position and legal arguments if your departure was handled respectfully.
- Follow All Company Work Rules Prior to Your Last Day of Work. Leading up to your resignation (or last day of work if you have been involuntarily terminated), you should report to work promptly for all shifts, follow all company policies and guidelines, work hard, and be professional. If you are planning to resign, you do not want to give your employer any reason to terminate you before you announce your resignation (or following your notice of resignation but prior to your last day of employment). As with the previous two guidelines, you also want to leave your employer on a positive note if at all possible.
- Quietly Gather Your Personal Belongings. Prior to tendering your resignation, and without drawing too much attention to yourself, you should clean out your office and remove your personal effects, or be in a position to do so on a moment’s notice. In the event that your employer escorts you to the door once you resign, you will want to be in a position to grab your personal belongings quickly. The question of whether to retain or remove any other employer information is complex and should be discussed with an attorney. While you generally have a right to retain your individual personnel information (e.g., your individual employment contracts, performance reviews, paystubs, and employee benefits information), it can be very risky to remove or retain copies of any other employer records. This is because employees are generally prohibited from using or disclosing their employer’s “confidential information” or “trade secrets” either during or after the employment ends. Employers often take an aggressive stance regarding what types of information are entitled to legal protection as being “confidential” or qualify as “trade secrets.”
- Document Mistreatment or Unlawful Conduct Before You Resign. If your employer is treating you unfairly, harassing you, breaching its agreements with you, withholding compensation or commissions that are owed to you, or otherwise treating you unfairly, you should seek legal advice regarding these issues prior to resigning. Your lawyer may suggest that you carefully document each instance of such behavior by taking contemporaneous written notes, maintaining a log of events, and calculating amounts owed to you. Retain copies of any e-mails or other documents that help to prove that your employer is treating you inappropriately. In consultation with your attorney, you may wish to report the unfair or inappropriate behavior prior to resigning and give your employer an opportunity to correct the problems. Properly documenting employer wrongdoing, discrimination, harassment, or breach of contract can minimize the risk of a lawsuit against you by your former employer for fear that you will file a counter-suit. Further, retaining evidence of wrongful conduct by your employer can substantially reduce the risk that a court will issue a Temporary Restraining Order (TRO) or other injunctive relief against you, even if you have signed a written non-solicitation or non-competition agreement. Under the doctrine of “unclean hands,” the judge can refuse to grant the former employer an injunction if you have been treated unjustly or unlawfully.
- Investigate the Employer’s Enforcement of Non-Compete Agreements. You should attempt to find out whether other similarly situated employees have been required to sign non-compete agreements with your employer. If so, determine whether your employer has enforced those agreements against departing employees in the past. Look for any facts that might help to establish that the company is inconsistent, does not require all similarly situated employees to sign non-compete agreements, or has not consistently enforced non-compete agreements against departing employees in the past. Because non-competition agreements must be reasonably necessary to protect the employer’s legitimate interests (such as confidential information and customer goodwill), evidence that the employer has not consistently required or enforced non-competition agreements can be very persuasive.
- Be Prepared to Return All Company Documents and Property. Before resigning, you should carefully gather all business records, customer lists, vendor lists, sales materials, marketing plans, financial information, pricing information, research and development, technical data, letterhead, stationery, business cards, company laptop (if applicable), company cell phone (if applicable), documents, and all other company property that belongs to your employer so that you can return it to the company on your last day of work. This includes documents and property stored in your home office, filing cabinets, basement, attic, garage, and old briefcases. Remember that most business records are “company property” owned by your employer, even if you were the author or creator. Employees often make the mistake of assuming that just because they created these materials, they are entitled to keep them. Often this is not the case. You should obtain specific legal advice regarding your situation if you claim ownership of company materials.
- Do Not Copy or Download Company Files. You should not download, copy, place on a thumb drive or disk, export, e-mail to yourself, or otherwise take with you any physical or digital customer lists, vendor lists, sales materials, marketing plans, financial information, pricing information, research and development, technical data, or other documents that belong to your employer. This is the biggest mistake that an employee can make when exiting a company. All of your e-mails, computer records, and paper records can be “discovered” later during a lawsuit. If you copy or disclose this information, you might be sued under a variety of legal theories including breach of contract, breach of the duty of loyalty, misappropriation of trade secrets, civil theft, conversion, violation of the federal Computer Fraud & Abuse Act, or under other claims. If you have taken such information with you, a court will be more inclined to punish you and find in favor of your former employer even if you have other valid legal defenses (e.g., invalidity of your non-compete agreement). Further, in my experience, a court is more likely to enforce a contractual non-compete agreement against an employee who has actually taken confidential or trade secrets information with them.
- Be Prepared to Disclose Digitally Stored Data to Your Employer. You should determine if company information has been stored on your personal laptop, home computer, or other digital storage media. If so, make sure to save all of this data on the company’s main computer server prior to tendering your resignation so that you do not possess the only copy. You should probably get legal advice about whether to delete such data from your personal computers or leave it intact. There are advantages and disadvantages associated with each approach. If you leave the information on your home computer, the employer may argue later that you have misappropriated trade secrets. But if you delete the information, the employer might argue that you were attempting to “conceal evidence” related to misappropriation of trade secrets. Usually, the most conservative approach is to find out what files reside on your home computer. When you resign, notify the employer about the existence of these files and offer to delete them (or even have a company IT agent inspect your computer and delete them).
- Do Not Destroy Company Files or Evidence. You should avoid suspicious activity on your company computer as well as your personally owned computers, such as deleting large numbers of files, “defragmenting” your computer, “scrubbing” your computer, or other techniques that may appear as if you are hiding information. If you have done this, or are considering doing so, obtain legal advice immediately. This type of activity can be “discovered” in litigation and is very incriminating. It is very common for the former employer to obtain a court order allowing it to copy your hard drive to be examined by a computer forensics expert. A trained computer forensics expert can easily detect attempts to “wipe out” the hard drive or conceal files. Moreover, a trained expert can often recover deleted files. An expert can determine if you obtained a new hard drive or software. If you are worried about what a computer forensics expert will find on your computer, or you have already engaged in these activities, it is better for you to get serious legal advice before you announce your resignation and/or join a competitor.
- Return All Company Documents and Property. On your last day of work, or earlier (if instructed by your employer), you should return all company documents and property, including cell phones, laptops, printers, stationery, credit cards, and confidential or proprietary materials. Create a spreadsheet or cover memo cataloging all of the items that you are returning and, if possible, have a friendly witness (such as a sympathetic co-worker) observe you when you return the company documents and property. If you ship the items back to the company, retain a receipt from the shipping company along with a packing list or spreadsheet itemizing all of the items that you returned. As explained above, in most situations you should not retain copies of the information that you are returning due to the legal risks involved.
- Do Not Search for a Job Using Company Time or Resources. You should not use company resources to look for a new job, plan a new business, or for any other competitive purposes. This includes not using company e-mail accounts, computers, paper, printers, fax machines, copy machines, scanners, telephones, or internet connections. Do not conduct your job search or business planning activities during working hours. Searching for a new job or planning a new business should occur at home during non-working hours, using your own e-mail account, computer, paper, printer, toner, and other resources. Likewise, if you retain an attorney to give you legal advice, you should not use a company-owned computer, e-mail account, or cell phone to communicate with your attorney. This could result in the waiver of the attorney-client privilege. For the same reason, you should not even access your private e-mails (e.g., Gmail® or Yahoo® e-mails) using a company-owned computer or other device, because this may violate computer usage policies and also leave a trace image of the e-mail message on your computer hard drive which can be viewed by your employer.
- Do Not Begin Competing or Solicit Customers Prior to Your Last Day of Employment. Regardless of whether you have signed a contractual non-compete agreement, you are legally prohibited from “competing” against your employer prior to your last day of employment. Thus, under no circumstances should you solicit business from your employer’s clients, customers, or vendors or otherwise begin to actively compete against your employer until after your last day of employment. Seemingly innocent actions such as notifying customers and vendors of your impending departure can be dangerous, so it is best to take a conservative approach and wait to notify anyone of your departure until after your last day of employment. If a customer suggests that you should resign and start your own business or join a competitor (while you are still employed), you should terminate the conversation and not respond to the encouragement or solicit the customer’s business (even indirectly). You can violate your duty of loyalty by even continuing the discussion about going into competition if you are still employed by the company.
- Do Not Recruit Employees Prior to Your Last Day of Employment. While you are still employed, do not encourage any of your co-workers to leave the employer, join you at your new business, or consider employment with your new employer. You can be accused of violating your duty of loyalty if you recruit or solicit co-workers to resign while you are still employed. Thus, even innocent statements — such as “I am really impressed by the company I will be joining and know that they are hiring” — can result in potential liability and an accusation that you are encouraging co-workers to quit while you are still employed.
- Minimize Your Paper and Electronic Trail. To the extent possible, you should avoid creating a “paper trail” or “electronic trail” of your job search, business planning, or related activities. All e-mails, faxes, resumes, cover letters, job applications, cell phone records, credit card receipts, bank statements, travel logs, mileage logs, and other such records that you create will be “discoverable” in litigation, along with everything on your work and personal computer hard drives. This includes e-mails sent from your home computer from your personal e-mail account. While it is difficult to completely avoid creating these documents while looking for another job, simply be mindful that your employer, your employer’s attorney, the judge, and a jury might read these documents some day. Thus, be professional, courteous, cautious, and careful when drafting these documents. If you are interviewing with a competitor, it is better that most communications take place over the phone or face-to-face rather than creating an e-mail trail of the position, duties, and potential solicitation of customers or plans to actively compete against your current employer.
- Do Not Disclose Sensitive Employer Information During Your Job Search. You should avoid disclosing sensitive marketing data, customer lists, vendor lists, pricing information, profit margins, financial information, sales data, revenue data, or similar information to a competitor of your employer while you are searching for a job. Take care when describing your accomplishments on your resume, as you might inadvertently disclose financial data, profit margins, business plans, or other sensitive information that your employer deems to be “confidential” or a “trade secret.” Avoid identifying customers by name. Do not list actual dollar figures when describing sales, revenue growth, profits, etc. While not all of this information may be entitled to legal protection, a conservative approach will minimize the risk of a lawsuit.
- Delay Business Planning Until After Your Employment Ends if Possible. If you are starting your own business, to the extent possible, you should try to delay the incorporation of your business, obtaining a tax ID number, opening a bank account, meeting with an accountant, hiring a graphic designer, leasing office space, or engaging in other business planning activities until the very last moment (ideally, after your last day of employment). This can be difficult, but be aware that if you have engaged in business planning activities for a long period of time while still working for your current employer, even if those activities took place during non-working hours, you could appear to have taken advantage of your employer or acted in an underhanded manner. Further, evidence of these activities will be fully “discoverable” in litigation. Under the law, employees generally can “prepare” to compete while still employed. But there is a fine line between “preparing” and actually “competing.” Therefore, postponing your preparatory activities until after your last day of work will minimize the risk of a potential lawsuit.
- Do Not Lie About Your Plans. You should not lie about your intentions to go into competition with your employer. This dishonesty will almost certainly be used against you in litigation if you are sued by your former employer. If asked about your intent, either side-step the question or be truthful and forthright. Ideally, you will approach the company on your own and tell your employer about your plans to join a competitor or start your own business. You probably should get some legal advice and coaching before this conversation because it can be risky and extremely sensitive. Take contemporaneous written notes of any conversations you have with your employer on this topic. In any event, lying will typically not do much good but will often heighten your employer’s distrust and prejudice the judge and jury against you. Lying makes you look guilty and rarely prevents your employer from figuring out your true plans.
- Explore Negotiations Regarding Your Competitive Activities. You may wish to consider negotiating an agreement with your employer regarding your departure and which competitive activities will be permitted thereafter. For example, the company might waive portions of a non-compete or non-solicitation agreement in exchange for your agreement to stay away from certain key customers for a period of time, waive a severance package, forfeit a commission, or provide something else of benefit to the employer. An attorney can help guide you (at least “behind the scenes”) during these negotiations. You should probably involve your new employer and its legal counsel in these negotiations as well to provide a united front.
- Request Your Personnel Record In Writing. Following your last day of employment, you should send a written request for a copy of your personnel file under the Minnesota Personnel Records Act. Ask your former employer to mail a copy, at no charge, of your personnel record to your home address. You should request your personnel file following your termination even if you previously requested the file while you were actively employed. You want to ensure that you have a complete copy including any new documents that were placed in your personnel file in connection with your departure. Further, the enforceability of non-compete agreements often turns on the timing of such agreements and whether you received anything of value (such as a promotion or raise) in exchange for signing such agreements. Because this information (whether favorable or damaging) is typically included in your personnel file, you and your attorney will need this information in order to respond to a lawsuit if your employer proceeds with litigation.
- Delay the Solicitation of Customers Following Your Departure. Following your last day of employment, you should avoid immediate solicitation of your former employer’s customers, vendors, and employees. Attempt to keep a “low profile” for a period of time. You may wish to wait several weeks or months before actively contacting key accounts, even if you have not signed a contractual non-competition or non-solicitation agreement. While your first instinct might be to aggressively solicit your former customers, doing so will provide the strongest motivation for your former employer to sue you. By giving your former employer a fair opportunity to solidify its customer relationships, find and train a replacement, and introduce the replacement to your former customers, a court will be less likely to prohibit you from doing business with these customers in the future on behalf of a competitor. Of course, if you have a written non-solicitation or non-competition agreement, you should also honor the terms of that agreement for the full duration (typically one or two years following your departure) unless you have received legal advice that the agreement is not enforceable and you are prepared to defend your position in a court of law.
- Independently Create Your Own Customer List. Following your last date of employment, but before contacting any customers of your former employer, you should independently gather information about each customer through legitimate, publicly available, alternative sources, such as internet searches, industry publications, trade association membership rosters, purchased customer lists, and the like. Independently prepare your own customer list from scratch prior to making any sales calls. Maintain a printed (and dated) record of all internet search results, research materials, and other evidence to prove how you learned of the customer’s identity. Your goal is to prove, through contemporaneous dated records, that you have independently identified these customers after your final day of employment, without relying on your memory of the company’s customer list and without using any of your employer’s documents or lists. Thus, rather than simply searching for the website of each of your former customers, you should conduct “higher level” searches in various industries that will identify a range of customers (not just the ones you called on). Next, drill deeper to research each particular customer’s address, telephone number, e-mail address, and the name of its decision-makers. Print dated records of all of your research results. Ensure that your customer list is not overwhelmingly comprised of your former employer’s customers, and take care to include names of new prospective customers with whom your former employer has never done business. Understand that many employers claim that their customer lists and/or specific information about their customers (such as the name of decision-makers, contact information, budgets, buying history, quality requirements, order volumes, etc.) constitute “trade secrets.” You should attempt to defeat this claim by proving how easy this information can be gathered from legitimate publicly available sources with minimal effort.
- Do Not Engage in Predatory Pricing. When soliciting customers, you should not intentionally “under-bid” your former employer based upon your knowledge of the former employer’s pricing. If you intend to under-bid your former employer, have the customer voluntarily provide you with pricing information from your former employer (e.g., bids, quotations, or purchase orders) before providing a quotation or bid. This will help you show that you obtained the pricing information from a legitimate source (the customer) rather than from stolen trade secrets or even your memory. If possible, your prices on various bids or quotations (in the aggregate) should be above, near, and under your former employer in order to demonstrate that you are independently quoting prices. Do not disclose your former employer’s pricing or profit margins to your new employer or the customers. If possible, have an independent person or department from your new employer set pricing, at least for a period of time (e.g., 6 – 12 months) to avoid the appearance that you are engaging in predatory pricing based on your knowledge of the former employer’s pricing and profit margins.
- Do Not Raid Your Former Employer’s Workforce. You should avoid recruiting former co-workers for a period of time (e.g., 6 – 12 months) following your departure. Even if you have not signed a contractual “no hire” provision, many employers lash out if they feel former employees are “raiding” their workforce. If you have signed a written “no hire” or “anti-raiding” agreement, the risks are even higher and in most cases you should honor the agreement for its full term (which might be longer than 12 months) unless your attorney has provided a legal opinion that it is not enforceable and you are prepared to defend your position in a court of law. Be very careful to avoid communications with former employees that could be construed as “recruitment.” Keep in mind that even if you have not signed a written non-compete agreement, if your former employer believes that you (or your new employer) are aggressively targeting its workforce, you may force your former employer into a corner and it may retaliate with a lawsuit against you alleging a variety of claims (whether or not they are meritorious). Thus, it is usually advisable to simply move on in your career and have minimal contact with your former co-workers for at least 6-12 months.
- Do Not Ignore a Cease-and-Desist Letter. Often, prior to starting litigation against an ex-employee and his or her new employer alleging unfair competition, the former employer will send a “cease-and-desist letter.” You should not ignore the cease-and-desist letter under any circumstances. If you receive such a letter, you should strongly consider retaining legal counsel familiar with non-compete contracts, trade secrets law, and unfair competition theories immediately. Likewise, you should probably cooperate with your new employer and its legal counsel to develop a united front and effective strategy for responding to the letter. Once you have identified your best legal defenses, your attorney can write a letter to your former employer and attempt to negotiate an amicable settlement before needless litigation begins.
- Prepare Your Legal Papers Before a Lawsuit Begins. Unfair competition litigation is often hard fought, intense, and compressed into a very short period of time. Often, the former employer begins a lawsuit coupled with an emergency request for immediate injunctive relief such as a Temporary Restraining Order (TRO) to enforce the non-compete agreement, avoid the disclosure of confidential information or trade secrets, or otherwise prevent the employee from competing. The lawsuit is often brought against both you and your new employer. The hearing on the TRO motion can take place almost immediately after the lawsuit is filed; sometimes even the same day or within a matter of days. It is critical that you consult a Minnesota non-compete attorney immediately after receiving the “cease-and-desist letter” so that the attorney has time to respond to the letter and prepare for a possible lawsuit. If you and your attorney are caught off guard, you won’t be able to tell your side of the story effectively to the judge. If the judge enters a TRO in your case because you did not have time to present affidavits or a legal brief, it could be difficult to convince the judge to lift the TRO later. You want to win the initial TRO hearing if at all possible.
Employees face potential legal risks whenever they leave their jobs. These risks are heightened when the employee plans to stay in the same industry, join a competitor, or start a competing business. Executives, officers, directors, and shareholders of closely held businesses face additional exposure due to their unique duties and the substantial competitive damage they can cause. All of these risks are greatly magnified when the employee is subject to written non-disclosure, non-solicitation, and/or non-competition obligations. While the scope of the employee’s legal obligations will depend on the unique facts of his or her contractual obligations, work history, and competitive plans, following the guidelines summarized above will likely reduce the risk of litigation regardless of the legal theory alleged by the former employer. Given the high stakes involved in lawsuits alleging unfair competition, disclosure of confidential information, breach of the duty of loyalty, breach of fiduciary duty, and misappropriation of trade secrets, employees should carefully consider these recommendations in consultation with an attorney prior to resigning. The employment attorneys of Trepanier MacGillis Battina P.A. are available for such consultations.
About the Author:
Minneapolis executive law attorney Craig W. Trepanier has extensive experience representing employees and employers in matters involving non-compete agreements, breach of fiduciary duty, misappropriation of trade secrets, and unfair competition. Craig may be reached at 612.455.0502 or firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota executive law firm located in Minneapolis, Minnesota.