Pittsburgh, PA
Legal Intelligencer
(by Steve Silverman and Steve Antonelli)
For many employers, it is also performance review season that is often accompanied by announcements concerning employees’ compensation for next year. As a result, this time of year can sometimes cause employees to consider a change of scenery. Employers should therefore be prepared for the possibility that an employee will voluntarily resign their employment and move on to another opportunity.
With the Holiday Season in full swing, many of us are busier than normal. We have parties to attend, shopping to finish (or in my case, start and finish), and year-end goals to accomplish, in addition to our “regular” work duties. This is also the time of year that many employers begin to wrap up financial matters and plan for the coming year by preparing goals, budgets, forecasts, and strategic plans. For many employers, it is also performance review season which is often accompanied by announcements concerning employees’ compensation for next year. As a result, this time of year can sometimes cause employees to consider a change of scenery. Employers should therefore be prepared for the possibility that an employee will voluntarily resign their employment and move on to another opportunity. Accordingly, employers should consider the following checklist if and when an employee announces their resignation:
- Employers should compile an inventory of the departing employee’s contractual obligations. If a departing employee is bound, for instance, by an enforceable restrictive covenant, employers should assess the potential for harm in the event of a violation. While the ever-broadening attempts to limit the use of post-employment, non-competition agreements have been well documented in the past year, reasonable restrictive covenants remain enforceable in Pennsylvania. Employers should have a full understanding of which employees are covered by such agreements as well as a full understanding of the terms of those agreements.
- Employers should determine whether the departing employee has access to trade secrets or other sensitive, proprietary information. If the employee does have access to such confidential information, the employer should ensure that appropriate steps are taken to protect the information. In many instances employers should suspend the departing employee’s continued access to sensitive information by prohibiting the employee’s access to the employer’s electronic files or computer system.
- Employers may also consider whether the departing employee’s continued access to sensitive information warrants continuing to pay the departing employee throughout the notice period contained in a restrictive covenant, even if the employee has already separated from the employer.
- If the departing employee has already misappropriated trade secrets or other confidential information, the employer should call its attorney, who will formulate a strategy for retrieving the information and any potential damages caused by the departing employee.
- Counsel will also help to determine whether the departing employee’s new employer should be contacted to inform them of the departing employee’s post-employment obligations and their obligation to preserve evidence, including metadata.
- In some circumstances, employers may decide to conduct a forensic review of the electronic devices and network access of the departing employee to confirm the misappropriation or the extent of the misappropriation. While not inexpensive, forensic evaluation often provides important evidence that can be pivotal in litigation.
- Employers should also determine whether, when, and how customers or other third parties should be notified of the employee’s departure and send appropriate notice to them. When doing so, employers should remain mindful of the fact that the departing employer may have developed personal relationships with these customers and third parties.
- Employers should compile an inventory of any other property that belongs to the employer but may be in the possession, custody, or control of the departing employee, whether inadvertently or intentionally. Employers should determine the location of the property—whether electronic devices, keys, equipment, tools, or passwords—and develop a plan to ensure its return.
- Employers should schedule (and follow through with actually conducting) an exit interview with the departing employee to:
- Determine whether the departing employee has secured a new job and learn any pertinent details about the new position;
- Remind the departing employee of any post-employment legal or contractual obligations related to trade secrets, confidentiality, non-competition, or non-solicitation of customers or former colleagues;
- Arrange for the return of company property, including passwords to accounts or computer systems that may only be easily accessed by the departing employee;
- Coordinate a plan for the departing employee to potentially assist the employer with transitioning the departing employee’s duties and responsibilities to a replacement;
- Clarify the employer’s expectations of the departing employee prior to the departing employee’s last day of employment; and
- Obtain constructive feedback from the departing employee regarding the employer, its management, policies, practices, and procedures.
This checklist is certainly not meant to imply that every resigning employee does so with ill intent. To be clear, that is not the case the vast majority of the time. Instead, this checklist is to help ensure that employers are not caught off guard by those rare situations in which a departing employee plans to retain information that does not belong to them. To the extent an employer is ever unsure about the motives of their departing employee, it should consult its attorney.
Steve Silverman is a shareholder in the Litigation and Employment and Labor groups of Babst Calland. Mr. Silverman devotes a significant amount of his practice to the defense and prosecution of theft of trade secret and non-compete suits. Contact him at 412-253-8818 or ssilverman@babstcalland.com.
Stephen A. Antonelli is a shareholder in the Employment and Labor and Litigation groups of Babst Calland. His practice includes representing employers in all phases of labor and employment law, from complex class and collective actions and fast-paced cases involving the interpretation of restrictive covenants, to single-plaintiff discrimination claims and day-to-day human resources counseling. Contact him at 412-394-5668 or santonelli@babstcalland.com.
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Reprinted with permission from the December 2, 2023 edition of The Legal Intelligencer© 2023 ALM Media Properties, LLC. All rights reserved.
