HR at the Office asks:
One of our employees, Peter, resigned last month to join The Office’s number one competitor. He worked his one month’s notice and started his new job on Monday. The Boss has just rung me to tell me that he received a LinkedIn alert this morning notifying him of Peter’s updated LinkedIn profile, which includes details of his new employer. The Boss mentioned something about Peter not being allowed to do this. The Boss is also worried about Peter using his LinkedIn connections in his new role – he has about 500 contacts, some of which are our customers! I’ve checked Peter’s employment contract and he is subject to a six-month restriction on soliciting our customers but I’m not sure what to do. Help!
I’d better ask Harbottle & Lewis.
Employment Team says:
LinkedIn is without doubt an incredibly useful tool in business – it has a staggering 150 million users in 200 countries worldwide. But its increasing use by employees also raises many tricky questions, including this one. It’s probably fair to say that employment law often struggles to keep up with the challenges posed by the increasing use of social media in the workplace!
You mentioned that The Boss was worried about Peter using his LinkedIn connections in his new role, especially as some of his connections are The Office’s customers and presumably people Peter got to know whilst an employee. But who actually owns Peter’s 500 or so connections? It sounds a silly question but it could feasibly be The Office, Peter or even LinkedIn. Unfortunately for The Office, the LinkedIn user agreement (which all users must agree to) isn’t particularly helpful because it doesn’t expressly deal with ownership of user connections. The only way The Office can have any certainty about ownership is by including an express contractual term in the employment contract. It may be that Peter’s contract has a clause making it clear that any LinkedIn connection made during the course of his employment is owned by The Office. We’d recommend you check this to start with. If the contract is silent, then unfortunately The Office will be on the back foot in trying to establish that Peter is not free to exploit these connections in his new role as he chooses – so you can see how important it is that this is something that is dealt with in the contracts of new employees in the future.
If it is not clear who owns the LinkedIn connections, then there will be a question mark over what should happen to those connections when the employment relationship ends. Added to that, it is likely that Peter will have many different categories of connections. Some might be personal, others might have been made before the employment began and others, such as the customer connections, will have been made during the course of employment. We would always recommend that the employment contract include an express requirement to delete connections made during the course of employment on termination. Again, it would be worth you checking Peter’s contract to see whether there was any such requirement included.
You also mention that Peter is subject to a restriction on soliciting customers for six months after termination. Such a clause will prohibit Peter actively poaching The Office’s customers. However, if a customer were to approach Peter of his or her own free will, then that is unlikely to amount to ‘solicitation’ by Peter. The question is whether updating his LinkedIn profile with details of his new employer could amount to (implicit) solicitation? Clearly, all Peter’s connections will be able to view this information and may even have received an alert in the same way The Boss did. We are not at present aware of any case law dealing with this issue in the LinkedIn context. However, there is guidance to suggest that a communication which does no more than inform a customer that an employee has left his employer is not a solicitation, even if that communication includes his new contact details in the hope that the customer will transfer his custom. There is therefore a real risk for The Office that what Peter has done does not amount to a breach of his non-solicitation covenant.
It’s definitely a good idea to take this opportunity to look at the drafting of The Office’s non-solicitation restrictions (and indeed the contract as a whole). For example, as well as the requirement to delete on termination any connections made during the course of employment, The Office could also require those connections not to be re-added for the length of any restriction. Additionally, The Office could limit what an employee can say about their departure on LinkedIn, so that it might be permissible for him to announce his departure from The Office but not give details of his new employer until the end of the restriction period.
It is also worth pointing out that, in the event that a key employee is leaving The Office in the future, agreed exit terms under a compromise agreement can address some of these issues. It would be possible for that agreement to deal with what that employee can and cannot say about their exit (and potentially even make payment of an ex-gratia sum conditional on compliance). The Office could also include specific provisions about LinkedIn activities after the employment ends.
Regrettably, The Office may not be in a strong position as far as Peter is concerned. But hopefully The Office will now have a better idea as to how to guard against these difficulties in the future. On a final note, it is also worth The Office considering whether non-compete covenants should be included in employment contracts going forward. As with all covenants, non-competes must be carefully drafted so as not to be so wide as to amount to a restraint of trade, in which case they may not be enforceable. But perhaps, in light of the increasing importance of social networking in business, the courts may be more willing to enforce a properly drafted non-compete restriction if the employer can evidence that its inclusion was necessary to protect a legitimate business interest.
What else can Harbottle & Lewis do to help?
We can review your organisation’s employment contracts to determine whether the issues set out above are dealt with appropriately in the contract. If not, we can suggest amendments to the drafting so as to ensure that in the face of more and more employees making use of LinkedIn in the workplace, your business is properly protected when the employment relationship eventually comes to an end.
19 July 2012