Non-Competition Agreements and Professional Networking Sites

August 23, 2010 Advisory

Non-Competition Agreements and Professional Networking Sites

Employers in a number of industries frequently require employees to execute non-competition agreements whereby that employee, upon termination of employment, is prohibited from engaging in certain competitive activities and/or doing business with the former employer's customers for a specified period of time. Historically, the former employer discovers violations or threatened violations only when the employee joins or is about to join a competitor.

However, with the ever-increasing use of professional networking sites as a job search tool, or to just stay "networked", some employers have found a new way to keep tabs on the activities of these former employees. Recently, in fact, TEKsystems filed suit against a number of former employees whom it claimed violated certain provisions of a non-compete agreement, along with their new employer. Noteworthy, TEK's source of information was the former employee's LinkedIn entries.

Specifically, it was alleged that a former TEK recruiter, by reaching out via LinkedIn to IT professionals that she had recruited while employed by TEK, and then placed with TEK customers (as TEK employees), violated her non-competition, non-solicitation, and non-disclosure agreement, which stated that for 18 months after leaving TEK's employ, she could not directly or indirectly "approach, contact, solicit, or induce any individual or corporation" that is a client, regular employee, or contract employee. According to the complaint, the former employee wrote, among other things, the following LinkedIn message to a TEK systems employee:

Tom: Hey! Let me know if you are still looking for opportunities! I would love to have you come visit my new office and hear about some of the stuff we are working on! Let me know your thoughts!

While the subject agreement did not specifically include the use of social media, the question will be whether such agreements must, in fact, explicitly prohibit such networking mechanisms in order to preclude former employees from engaging in competitive activities. The court will further need to balance the employee's right to remain in a professional network against the former employer's right to protect its business interest through enforceable non-competition agreements. Trial is currently anticipated to commence in August of 2011.

Clearly, social or professional networking sites provide new avenues for employers to gather evidence of conduct by former, or even current, employees who may be violating non-competition or other restrictive covenants contained in employment related agreements. Employers would be well advised to review their current non-competition and non-disclosure agreements, and to specifically reference social media in order to curtail unfair, post-termination, competitive activities.