Magazine article Workforce

Protect Trade Secrets from a Corporate Raid

Magazine article Workforce

Protect Trade Secrets from a Corporate Raid

Article excerpt

It could be that your employees are just too good. Or it could be the economy is just too good. Either way, corporate raiding has become a mainstream business practice-and your organization may be feeling the drain.

Still, attracting employees away from a company using sheer competitive advantage is a far cry from breaking restrictive covenants or hiring to gain trade secrets. There's little to be done about the former. As for the latter, you can help prevent illegal pilfering of your employees. Louis A. Karasik of Los Angeles-based law firm Weston, Benshoof, Rochefort, Rubalcava and MacCuish LLP, explains how.

Where should human resources bin to protect against illegal corporate raiding?

First ask: Are you trying to protect people, or are you trying to protect information? Because in a corporate-raiding scenario, generally speaking you have two different issues that you face as a company. Is the other side simply taking good employees that you wish they didn't take because they're valuable people and it will hurt you competitively not to have them? Or is what you're trying to protect the information in the people's heads: company secrets, confidential, proprietary, customer information and vendor lists and those kinds of things?

Under the law you have better chances to protect the latter than the former in terms of things you can do.

On the people side, how do you stop a company from taking your good employees, assuming trade secrets aren't an issue?

That's a tough one for an employer, to keep somebody from taking people. One of the tried and true ways of protecting your people is having them sign a contract that says they agree not to go work for a competitor.

ADA Requires Disability-- Specific Accommodations

Jane Vollmert, a dyslexic 21-year employee of the Wisconsin Department of Transportation (DOT), was unable to learn a new computer system introduced in July 1994. Though given one-on-one training, by April 1995 she could only complete 67 applications for disabled licenses a day, compared to 25 and 30 applications an hour by her co-workers. The DOT denied her request for a learning disability specialist because she had been given months of training. Vollmert was transferred to another position.

After Vollmert filed suit alleging failure to accommodate in violation of the Americans with Disabilities Act, the district court dismissed her claims. However, the 7th Circuit Court of Appeals reinstated her case, based primarily on a vocational expert's report that@ with training geared specifically to overcome her dyslexia, Vollmert could have successfully mastered the new system. Because the accommodation of one-on-one training provided to Vollmert was not tailored to address her disability, it was not reasonable. Ulmert vs. Wisconsin Department of Transportation, 7th Cir., No. 98-3673, 11/24/99.

Impact. Employers must ensure that accommodations are tailored to an employee's specific disability.

-D. Diane Hatch & James E. Hall

But that doesn't work in states like California and others in which these agreements, called restrictive covenants, are not enforceable. In that case, the most direct way of keeping people from going to work for a competitor is not really available.

But If an employer's state recognizes a restrictive covenant, HR should have higher-level employees sign one?

Definitely. But keep in mind it won't necessarily be in effect outside your state. Say you sign a key employee to a restrictive covenant in New York agreeing the employee won't work for a competitor for two years. Then he or she moves to California, and in a year decides to work for a competitor. The California courts most likely won't enforce that restrictive covenant, even though it was lawful in New York.

So it's kind of buyer beware to states that have restrictive covenants: You may think you have something enforceable, but not if your employees head out to the sunny shores of California. …

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