Securing Employees’ Restrictive Covenants And Other Important Documents

May 10, 2016

Topics: Employees as Competitors

As employment attorneys, we are frequently contacted by companies that have recently lost a key employee to a competitor and are concerned that the former employee may share trade secrets, marketing plans, client lists and other confidential information with the new employer.  Sometimes the former employee actually sets up a business on his or her own and begins directly competing by aggressively pursuing the old employer’s clients.  In such a situation, any employment agreements or restrictive covenants (non-competition, non-solicitation and non-disclosure agreements) the employee may have signed may be the key to whether the company has any recourse.  Unfortunately, we find that a surprising number of companies have misplaced these agreements, or the former employees have removed them from the company’s premises.

Of course, without evidence of the contract that existed between the parties, it is likely impossible to pursue a breech of contract claim.  Thus, if you lose your copy of an agreement, you may lose all the protection that agreement was meant to afford you – and, believe me, employers do this all the time, particularly in the case of long term employees.

If your company maintains a safe, locked file or safe deposit box for essential company documents, it would be an appropriate repository for original signed employment agreements.  You can also scan signed agreements into your computer system and store them in a secure/password-protected area on your server; backups of such documents should also be stored off-site.  In addition, it would be wise to make certain that your attorney has a copy, since you will be turning to your attorney in the event that problems arise in relation to the employment relationship.  When we draft offer letters, employment agreements and restrictive covenants for clients we always ask them to send us back a signed copy for our files.

Similarly, many employers are now aware of the necessity of getting signed receipts when essential employment policies, such as discrimination and harassment complaint procedures, monitoring policies and employee handbooks are distributed.  Such documents can provide an employer with an affirmative defense in employment actions, but only if you can prove that employees received them.  Signed receipts for policies and handbooks must be stored as carefully as original employment agreements, because they, too, can become crucial evidence.

Employment agreements and other employment materials signed by employees can go a long way in making you case when you need to take the offensive against wrongful competition or defend your company against claims made by disgruntled employees – but only if you can find them!  Make sure you are taking steps to secure these important documents.