Using Your Social Media Strategy to Protect Trade Secrets and Minimize Liability

As most employers know, restrictive covenant agreements, often referred to as Confidentiality Agreements or Proprietary Information Agreements, are not the only documents that can be used to protect employers’ confidential and trade secret information. Employers also use policies in their employee handbooks to protect such information. While employers frequently think of policies covering confidentiality, codes of conduct, and information technology (IT) when addressing trade secret protection in their employee manuals, many have not taken advantage of the fact that a social media policy is another shield in their armory for protecting this information.

There are both obvious and subtle ways in which an employee could reveal confidential information on social media. The obvious ways include sabotage, posting confidential financial information online, and posting statements that inadvertently reveal the identity of the employer’s customers when the customer list is confidential. There are less obvious ways, however, in which employees may reveal confidential information in social media. For example, an executive may post that he’s traveling to France on business. Even this seemingly benign information could reveal the purpose of the visit to a competitor, which could include acquiring a key company in France, looking at France as a potential market for expansion, forming a partnership with a French company, etc. Another example is an innocent employee gripe that tips off a competitor to valuable information. For example, the complaint could be that the employer is making the employee work late because of a new initiative that the employer is about to roll out—before the initiative is made public. Employers should be sensitive to these issues and may want to consider going beyond the standard prohibition on revealing confidential information in social media policies.

Employers should be aware that employee social media use can be a threat before a new employee starts his or her first day of work and continues to be a potential threat even after termination of employment. This is because all employees who sign confidentiality agreements are under obligations not to disclose confidential information after separation of employment, and some have other restrictions such as covenants not to compete and promises not to solicit customers and/or employees. Former employees are as capable of revealing confidential information over social media as are current employees, and new employees can violate restrictive covenants owed to old employers before they even start their jobs.

One way that employees can use social media in violation of restrictive covenant agreements is through the use of the online professional network, LinkedIn. LinkedIn connects business people together, and it is common for sales employees of a company to “connect” with customers. When those sales employees separate their employment, they do not cease being “connected” with their former employers’ customers. Often, those sales employees are under post-employment covenants not to solicit those customers, and LinkedIn allows users to update their employment information and automatically notify all of their “connections” about their new contact information. While that in and of itself may not be enough in most jurisdictions to constitute a “solicitation,” it is very easy for the former employee to send a message to his or her connections inviting them to contact the employee at his or her new place of employment. It is also very easy for a former employee to “connect” with a customer or employee of the former employer for the first time after separation of employment, which moves the line a lot closer to “solicitation.”

This is not a theoretical discussion. This fact pattern was the subject of litigation in TEKSystems v. Hammernik, filed in 2010 in the federal district court in Minnesota. In that case, an IT staffing firm, TEKSystems, sued three former employees and their new employer based upon allegations of violations of nondisclosure, non-competition, and non-solicitation obligations. The alleged evidence of wrongdoing included one employee’s attempt to “connect” with candidates to whom the employee had been introduced at TEKSystems and with whom the employee wished to continue to stay in touch while at her new employer. This attempt to “connect” via LinkedIn was part of the evidence that TEKSystems used to show alleged violations of a non-solicit provision.

The TEKSystems case demonstrates that actions over social media can create legal risk, if not downright liability, if employers do not have a comprehensive strategy to deal with their employees’ use of social media. They may be unaware that their former employees are violating their post-employment covenants if they do not monitor social media and, on the hiring side, may find themselves threatened or even sued based upon innocent, or not-so-innocent, actions by their newly-hired employees.

This post was authored by a shareholder in the Austin office of Ogletree Deakins.