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How Linkedin Can Undermine Your Employee Non-Solicitation Restrictions

Without careful drafting, non-solicitation restrictions in your employment agreements can be easily undermined by an ex-employee’s use of LinkedIn and other social networks, as the two recent cases below demonstrate.

Background

Non-competition provisions are common for employees and enforceable in most states. The provisions can take various forms. However, the two most common are (1) straight non-competition, which prevents an ex-employee from competing or working for a competitor and (2) a non-solicitation restriction, which prohibits an ex-employee from soliciting customers of the former employer or soliciting former co-workers to leave the employ of the former employer.

However, what happens if by posting an update on LinkedIn an ex-employee makes known to the ex-employee’s connections (which include customers of the former employer) that the ex-employee has a new position, and by implication, is now available to receive orders from customers who the ex-employee had contact with during his/her prior employment? What about sending connection requests to his former co-workers? Would these actions violate a non-solicitation restriction?

Two recent cases explore these issues.

LinkedIn and restrictions on soliciting customers of the former employer

In BTS USA Inc. v Executive Perspectives LLC, the Connecticut Appellate Court last year affirmed that a non-solicitation restriction does not necessarily prohibit an ex-employee from posting employment status updates on LinkedIn, even though the ex-employee’s LinkedIn connections include customers of the former employer.

In this case, the former employer was in the business of designing and marketing training simulations, experimental education exercises, and related products. The ex-employee was bound by the following restriction:

“Employee shall not for a period of two (2) years immediately following the end of the Employee’s active duties with Employer, either directly or indirectly, either for himself or for any other person, company or other business entity … Call on, solicit, or take away, or attempt to call on, solicit, or take away or communicate in any manner whatsoever, with any of the clients of Employer on behalf of any business which directly competes with employer.”

This ex-employee maintained a personal LinkedIn account. Many of the customers of the former employer were his connections on LinkedIn. The ex-employee resigned and went to work for a competitor, and the ex-employee was not prohibited from doing so. Soon after beginning to work for the competitor, the ex-employee posted to LinkedIn an update notifying all of his connections that he had a new position. Also, the ex-employee then updated the website of the new employer and posted to LinkedIn an invitation for all of his connections to check out the newly updated website. By means of these posts, customers of the former employer were notified of his new position with a competitor and were also sent updates as to the activities of this competitor. Did these actions amount to a violation of the non-solicitation restrictions?

Unfortunately for the former employer, the appeals court affirmed the lower court’s decision that there was no violation because the particular non-solicitation provision was silent on the use of a social network. However, there’s no doubt that an employer would want such LinkedIn postings to be covered by the non-solicitation restriction.

LinkedIn and restrictions on soliciting former co-workers

In Bankers Life v. American Senior Benefits Solution, decided this month in the Illinois Appellate Court, an ex-employee bound by a restriction that prohibited soliciting former co-workers sent LinkedIn connection requests to several of the co-workers after ceasing to work for the former employer. The requests did not contain any messages indicating an attempt to solicit these former co-workers to leave the employ of the former employer.

The former employer sued the ex-employee for violation of the non-solicitation restriction. The court concluded that these connection requests did not violate the non-solicitation restriction because there was no evidence of any direct effort to encourage these employees to leave the former employer.

Recommendations

There’s no doubt that many employers would like to prohibit use of LinkedIn and other social networks by ex-employees which even indirectly might solicit either the former employer’s customers or employees.

Therefore, at a minimum, non-solicitation provisions need to specifically cover use of social networks such as LinkedIn and require the removal (and non-inclusion during the restrictive period) of all LinkedIn connections who are customers or employees of the former employer. If the non-solicitation provisions prohibit both indirect as well as direct solicitations, then this might as well cover social network postings. However, being specific as to use of social networks is the best approach.

Additionally, employment agreements and employee handbooks should cover employee use of social networks in general and provide that ownership of social network accounts used by employees for marketing purposes should be owned by the employer.

It’s worthwhile noting that the above cases would have probably come out differently were there blatant (active) solicitation as opposed to the passive use of posts sent to all connections and mere connection requests sent to former co-workers. However, employers will want to cover this passive use of social networks as well.


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William S. Galkin
William S. Galkinhttp://galkinlaw.com/
Mr. Galkin has dedicated his legal practice to representing Internet, e-commerce, computer technology and new media businesses across the U.S. and around the world. He serves as a trusted adviser to both startup and multinational corporations on their core commercial transactions including corporate formation and transitions, intellectual property, technology licensing and transfer, regulatory compliance, and agreements for online businesses. His broad experience gained during more than 20 years in practice allows him to provide cutting-edge, creative and efficient solutions to complex problems. Mr. Galkin has been an Adjunct Professor of Computer Law at the University of Maryland School of Law and Adjunct Professor of Business Law at the Merrick School of Business at the University of Baltimore, as well as the Chairperson of a panel on Crimes in Cyberspace for the 19th National Information Systems Security Conference (Sponsored by the National Security Agency). Mr. Galkin also authored the Maryland Intellectual Property and Technology Transactions Forms and Practice Manual, published by Data Trace Publishing. Mr. Galkin is also a member of Schwell Wimpfheimer & Associates LLP, with responsibility for technology transactions, which affiliation allows Mr. Galkin to provide a broad array of legal services to his clients. Additionally, he serves as Of Counsel to the Information Technology Group of one of the largest Israeli law firms, managing many U.S. transactions for the firm’s clients.

2 CONVERSATIONS

  1. One client we worked with had a wide scope policy that any activities done by our consultants for that client should not be shared via the social networks. Often, it goes about saying that you do not share privileged client information with the competition — never, never, never. But, the client wanted all activities, included industry best practices that they may or may not be using to not be shared as well.

  2. WOW! I can see your point about needing to be very specific in policies as they relate to employee contracts. Sadly, as I read this it gave me the impression that people really have become property. I’m not starting a debate on this, I’m just voicing how difficult and complicated life has become when we can’t celebrate a new position without fear that we may violate a rule. I’m glad that in this case the former employee was not soliciting or doing anything underhanded. Interpretations are – well, interpretations of our own truth. Sometimes hard to convince others that they have gotten the wrong impression.

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