Your Top Talent Walks Out the Door:
Now What?
How to Stop Your Competitors from Raiding
Your Workforce and Engaging in Unfair
Competition in the U.S. and Canada
Wednesday, June 9, 2010
Sponsored by the Employment Law Alliance
© Employment Law Alliance
Introduction
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Presenters
Linda H. Joseph, Moderator, Schröder, Joseph &
Associates, LLP , Buffalo, NY
ljoseph@sjalegal.com
Betty S.W. Graumlich, Reed Smith LLP, Richmond, VA
bgraumlich@reedsmith.com
Steven M. Gutierrez, Holland & Hart LLP, Denver, CO,
sgutierrez@hollandhart.com
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Presenters
Gregory J. Heywood, Roper Greyell, Vancouver,
British Columbia, Canada
gheywood@ropergreyell.com
Andrew H. Smith, Director, Associate General
Counsel, Citigroup, New York, NY
andrew.smith@citi.com
Barry M. Willoughby, Young Conaway Stargatt &
Taylor, LLP, Wilmington, DE
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What Happens When
They Walk Out?
• Exit letters to employees enclosing the
agreement
• Preliminary injunction actions
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Drafting Permissible
Restrictions
• Make sure it is part of a valid employment
contract
• Avoid Boilerplate Covenants
• Regional differences: time limitations/
geographic limitations/scope limitations
• Make sure it is reasonable: narrow the time,
place, and activity
• Understand the non-compete statute of the
state in which you do business
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Drafting Permissible
Restrictions
• Non-solicit/non compete
• Confidentiality provisions (definition of
confidential information, UTSA protections,
time restrictions)
• Patents/Intellectual Property ownership
• Bluelining v. segregation provisions
• Liquidated Damages Provisions
• Provisions granting consent to send the
agreement to new employers
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Drafting Permissible
Restrictions
• “Re-write” States: Courts can re-write
overbroad non-competes to limit restrictions
to facts at issue.
• “Blue Pencil” States: Courts cannot modify
agreement, BUT…
– They can enforce separate lawful covenants
within the contract, and
– Strike language where changes are
grammatically possible
• “Public Policy” States: Non-competes are
prohibited as a matter of public policy
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Preventing a Temporary
Restraining Order
• Fiduciary duties
• Contracts
• Advice to prospective employee
• Hiring groups of employees
• Chinese Walls
• Doctrine of Inevitable Disclosure
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Test for Injunctions/
Proof of Damages
• Regional differences
• With agreement
• Without agreement
• Bonding
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Strategies
• Audit your Internal Security policies
• Demand letter
• Damages or injunction?
• Temporary restraining order v. preliminary
injunction – does it matter?
• Sue employee, employer, or both?
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Wrap-Up
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