Gruntled Employees

Eight ways to guarantee yourself a noncompete lawsuit

A year ago, I wrote a post for employers looking to protect themselves (and their secrets and customer relationships) with noncompetes. (See "Eight ways to lose a noncompete case.") It only seems fair that I should offer something for the departing employees to consider before they leave. (Wait a minute .... Is this helping the other side? No: it's not about sides. See "Rethinking noncompetes.")

If you want to make sure to find yourself on the business end of a noncompete lawsuit, do the following:

1. Take documents. When you take documents with you from your old employer, you cede the moral high ground. Oftentimes, your lawyer needs to argue how unfair it is for the big bad company to prevent poor little you from making an honest living. When you take documents, that whole "honest living" bit starts to sound off-key. To be sure, there's a big difference between taking the secret formula of Coca-Cola (or the secrets to the nooks and crannies in English muffins) and taking a generic business template. Your lawyer might be able to argue that the documents you took weren't really secret, and thus not worthy of as much protection. By why even go there? Don't take any documents, secret or not.
2. Email stuff to yourself. It always amazes me how often seemingly smart people appear to lose the use of their brains when it comes to email. A typical routine for a departing employee is to send email to a personal account from his or her corporate email account. Why on earth do you people think no one's going to catch you doing this? Because no one was next to you when you hit "Send"? Email uses computer networks, monkey boy. Computer networks keep track of stuff — we call it data. When this data shows you sending emails to yourself, people assume the worst — that you're stealing stuff. Don't do it. You will always get caught. And then you will get sued.
3. Use thumbdrives. This is a newer technique for taking documents. Instead of creating an email trail, departing workers use a tiny thumbdrive to make copies of documents and walk out the door with them. Over the years, thumbdrives — which can be as small as a stick of gum folded in half, with a USB plug sticking out of one end — have gotten cheaper, faster, and (in terms of amount of storage) bigger. But what these geniuses fail to realize is that these miniature hard drives have serial numbers, and the computer it gets plugged into often logs that serial number. With some system setups, the employer can see exactly what files were moved between the computer and the thumbdrive. Don't take the chance. Assume that the other side will find out whatever you don't want them to know. Leave your thumbdrive at home.
4. Divert business. Most courts around the country have ruled that it's OK for an employee to prepare to compete before leaving. They have recognized the reality that people don't leave their old jobs until they have something definite lined up for afterwards. Generally, preparing to compete is not itself a violation of a noncompete agreement. But actually competing before you leave is. And it's also a breach of the duty of loyalty that every employee owes to an employer. Diverting business to your new company while still collecting a paycheck from your old one is wrong and unlawful. Even if you know that you're going to miss a golden opportunity, too bad. Don't divert business.
5. Solicit customers before you leave. Related to the last point, it's also a bad idea to talk to clients before you leave. Yes, it would be nice to know that they're prepared to follow you to your new endeavor, but life is about taking risks. If the customer really likes you, they will follow you no matter what. So have faith in them, and in yourself. Don't talk to clients about your leaving before you actually go.
6. Talk coworkers into leaving with you. This also makes employers very angry. They start to worry about a mass exodus, and they start using loaded words like raiding and poaching and piracy. Plus the courts tend to be less sympathetic about Pied Piper departing employees. A court may invalidate a noncompete because the employee's right to ply their trade outweighs the employer's right to have its noncompete enforced. But an employee has no particular right to poach other employees. Leave your friends behind. They can always join you later down the road.
7. Leave disrespectfully. I know, I know. This sounds a little touchy-feely. It's not. This is the product of litigating noncompete and other employment cases for the past 16 years. It's cosmic law: people sue people they don't like. People don't sue people they do like. Burning your bridges on the way out directly increases the chances that you'll get sued. Sure, you might leave in a respectful and grown-up manner, and still get sued; you can't control other people's decisions. But you can reduce the risk of a lawsuit by leaving the right way. Saying things like "I've enjoyed my time here," "I have an opportunity and I owe it to myself and my family to try to pursue it," and "I have no intention of harming you" are all things you can do to lower the chances of a lawsuit. Slamming the door on the way out after cussing out your old boss is a good way to increase the chances of being sued.
8. Act "cute." I see this all the time. People like to play lawyer and come up with "clever" (I'm making finger quotes here), technical ways of getting around their noncompetes. Like having a coworker quit or a customer fire the old employer, waiting a week or two, and then having them join your new company. ("What? They're no longer a customer/employee." I call this acting cute. All it does is make you look guilty. Your former employer will see right through it. The judge will see right through it. I've seen many cases that were lost because the employees acted cute. Don't.

Avoiding these eight mistakes will not guarantee your freedom from a noncompete lawsuit. But it will decrease your chances of getting one, and it will increase your chances of winning it.

Discussion question: What are some other things you've seen people do to buy themselves noncompete litigation? Leave your answers in the comments below.

Rethinking noncompetes

I have to admit it: For the past 16 years, I've been a bit of an "employer snob." Professionally, I've described myself with the cumbersome and inelegant mouthful "management-side employment lawyer." (Seriously: you want to see someone fall asleep standing up at a cocktail party? Tell them you're a management-side employment lawyer. Don't get me wrong: the job's not boring. Just the label.) Labels aside, I've seen my role as someone who helps employers.

But over the years, as my practice has grown, I have developed a specialty in noncompete litigation. (Unintended consequence: some clients have asked me if I knew a good employment lawyer. D'oh.)

Noncompete practice is a little different from the rest of employment litigation because you tend to have management-side employment lawyers (snooze) on both sides of the cases. Which makes sense because you have employers on both sides: the old (enforcing) employer and the new (defending) employer. We do both sides at Shepherd, although if pushed, I'd probably say that I enjoyed defending more.

And here's where my problem comes from. I like to say that I don't represent employees, and that's generally true. If you want to sue your employer for wrongful termination or some sort of USERRA violation, I ain't your guy. But truth be told, when I'm defending a noncompete lawsuit, I am in fact representing (former) employees. To be sure, it is commonly the new employer who's paying my freight. But most of the time, the new employer is not named as a defendant. So, yes, I represent employees in noncompete cases. And quite honestly, we've had some very good success in doing so, against some of the largest law firms and employers in the world.

But I've only just come to realize that I've been looking at this the wrong way. It's not about choosing a "side" — employers on one side and employees on the other side. It's about following a principle.

Most noncompete lawsuits are brought for the wrong reasons: to punish former employees. To thwart competition. To send a message to competitors to stay away from our people. To send a message to our employees that you're not free to leave.

I have a problem with that.

As I've said many times over the past three and a half years on this blog, talent is the most important asset any company has. And it's up to the employers to find, train, manage, and keep this talent. Noncompete agreements, which are almost always forced down a new employee's throat without the possibility of negotiation, are a poor way to retain employees. Fear never inspires loyalty. And disloyal employees will find a way to leave eventually.

No, the better method is to give employees reasons to want to stay. But if they decide eventually that it's time to leave the nest, then they should be free to do so. Even if it means that they're going to compete.

With one exception. They can't take our stuff. And by stuff I mean two things: our secrets and our client relationships. If their old jobs required them to work with our secrets — our legitimate, protectable secrets, not stupid things like prospect lists — then they should not be allowed to take them to their new jobs. And if in their old jobs we paid them to develop and maintain customer relationships to the extent that they became the face of our company, then they should have to stay away from those relationships for a reasonable period of time. A year, say. Enough time to make the customers understand that the company was what made the relationship special, not the departed employee.

And that's it. If a company hires me to enforce a noncompete against an employee who has taken secrets or hijacked our customer relationships, then I'll go after that employee with every club in my bag. But if an employer wants me to help punish or screw over employees who simply wants to do their own thing, that employer's going to have to find a different firm.

The principle I'm interested in is fair competition, because that's what our system's all about.

So from this day forward, when it comes to noncompetes, I'm not about being on the employer's side versus the employee's side. I'm about promoting fair competition. The law is designed to protect against unfair competition, not ordinary competition.

Employees: If you are stuck with a noncompete and you want to go to another company or maybe start your own, we can help you — as long as you're not stealing secrets or unfairly commandeering customer relationships.

New employers: if you're looking to hire new talent but not looking to score your competitor's secrets, we can help you.

And old employers: if someone's looking to unfairly compete, we can help you.

It's not about employers and employees. It's about competition. That's the side we're on.

Why employment lawyers screamed more than those Denny's chickens

If you couldn't find the remote after the Saints pantsed the Colts (regretting their "We're baaa-ack!" call in the pregame yet?) in this evening's Super Bowl, you were stuck watching CBS's new show "Undercover Boss." I have to admit: I wasn't planning on watching it, and when the remote fell between the sofa cushions, I then planned on hating it. But in the end, I didn't. I'm not saying that I'm going to fan it on Facebook and start planning my life around it, but I did watch this debut episode.

The premise is simple: The president of a huge company goes "undercover" as a frontline worker for his own company to see just how miserable his employees can be. (In the pilot, it was Waste Management president and COO Larry O'Donnell.) To explain the camera crew following him around, a cover story was created that he was part of a documentary about working in entry-level jobs. (Oooh ... clever. The old base-your-lies-on-the-truth gambit.) Then at the end of the hour, he tears off his disguise (which apparently was a day of stubble, which distracted people from his five-hundred-dollar glasses) and reveals his COO-ness. Then he promotes all the nice people and sternly rebukes vaguely needles the employment-law-violating plant manager. Cue the credits.

After a night filled with chickens screaming during commercials for Denny's, I'm certain that employer attorneys around the nation had a similar reaction. Letting a camera crew film your bad employment practices and labor-law violations? Yikes.

On the other hand, the message that a company president should have firsthand experience with what his or her frontline employees are experiencing is a good one. Perhaps if more executives watch "Undercover Boss," they might worry more about how their employees are being treated.

Now pardon me while I go work on my day-old stubble so that no one recognizes me at work tomorrow ...