Did you recently lose an employee to a competitor? Are you worried that that employee might be walking away with some of your most important trade secrets or clients? While losing an employee who was intimately involved with the details of your business can be concerning, employee turnover is a fact of the modern-day economy. Fortunately, there are a number of things you can do to protect yourself and your business from unnecessary interruption and loss of business.
If your employee has already left, it might be too late to do the first thing we’d recommend - have non-compete and non-solicitation clauses in any agreements you have with your employees. Now, you might not be able to have them for all employees: Jimmy John’s wasn’t able to enforce non-compete clauses against departing sandwich makers, but you can enforce one against key salespeople who routinely interact with your customers or an engineer who routinely works with your products and knows your company’s trade secrets.
If you elect to use non-compete or non-solicitation clauses with your employees, be careful when you draft them: to be enforceable, the clauses must be supported by valid consideration, and they must be reasonable in time, geographic scope, and scope of activity restrained. For a discussion on whether your non-competition and non-solicitation clauses are enforceable, please see our post on this subject here. If your agreement isn’t enforceable at the outset, you might not be able to obtain relief until it’s too late.
If you do have non-compete agreements with your employees, you may need to file a lawsuit to enforce your agreement with your employee. Once you do so, you can obtain almost immediate relief: a Texas court can immediately issue an order (called a temporary restraining order) restricting your employee from violating your agreement. A few weeks later, a Texas court will then convene a hearing to consider whether you will be able to prove your case. If the court finds that you are likely to prevail on your case (i.e. you will be able to prove your non-compete is enforceable and that the employee is violating it), the court will issue a second order (called a temporary injunction or preliminary injunction) restricting your former employee from violating your agreement until the case concludes.
Don’t have a non-compete agreement with your employees? Both Texas and federal law protect your trade secrets, and you may be able to obtain relief in the event your employee’s departure threatens your trade secrets.
The first thing to do is investigate whether your employee actually took any documents or files just before their departure. Did your employee email herself your client list? Download an important file to a flash drive? If so, you can ask the court for an order requiring the employee to return your files to you.
Often, however, all your former employee needs to threaten your business is the employee’s familiarity with your business that he or she will inevitably take with them to their new job. While this case is more difficult for you to prove, you may be able to argue that your former employee’s employment with a competitor will inevitably harm your business. To do this, you’ll have to prove that the employee’s employment at the new employer will inevitably require that employee to use your trade secrets and confidential information.
Questions? Are you an employer concerned with an employee’s recent or upcoming departure? An employee with a prior employer who is threatening action? Please don’t hesitate to reach out - these employment disputes move quickly, and you’ll need to act before it’s too late.
