Five Steps for Preventing Raids on Your Employees
Staffing talent is often one of the most valuable assets for California companies. Preventing raids on your employees is important, particularly when a high-level, managerial employee is departing. The last thing you want is a flood of other employee departing, too. Maybe that is just part of doing business, but if the departing employee is stealing other staff members, that is a different story.
Here are five steps for preventing departing employees from raiding your staff.
Step One: Clearly Specify the Duty of Loyalty in Employment Contracts
Step one is having all of your key employees sign employment contracts and specifying in those contracts the duty of loyalty. Even if the employment is “at-will,” employees should still sign a contract.
Under California law, employees owe certain duties to their employers. These duties tend to be lumped together under the so-called duty of loyalty. According to legal doctrine, the employment relationship, particularly among and between managerial employees, is one of trust and confidence. The duty of loyalty means that employees must use their best efforts on behalf of the employer, must not divert business opportunities to themselves or others, and must not act to the benefit of another employer. This duty of loyalty applies with particular force when an employee is preparing to depart and preparing to compete against his or her current employer. As it relates to other employees, the duty of loyalty means that a departing employee, while still employed, cannot solicit other employees to join him or her in the new business.
When drafting employee contracts, even though the duty of loyalty is imposed by law, it is still important and valuable to set out the duty in plain, clear language.
Step Two: Specify That Soliciting Employees to Leave is a Violation of the Duty of Loyalty
The employment contract should specify that it is a violation of the duty of loyalty to solicit current employees to leave or otherwise to attempt to lure them away. Consider liquidated damage clauses as additional enforcement mechanisms.
Step Three: Prohibit Certain Activities
The well-drafted employee contract will specifically prohibit certain activities such as:
- Meeting with employees to gauge interest, discuss new business;
- Announcing the jobs that will be available in the new company;
- Announcing salaries and benefits that will be available in the new company; and
- Subtly or not-so-subtly guiding existing employees to job postings for the new company.
The contract should also impose an affirmative duty to NOT talk to existing employees even if those employees initiate the contact.
Step Four: Terminate the Departing Employee Early, Thus Cutting Off Access
If you believe that a departing employee is a threat to your existing staff, you can act proactively and fire the departing employee early. This terminates the employee’s easy access to your other staff members. This may also be wise to protect trade secrets and other confidential information such as customer lists.
Step Five: Threaten Aggressive Litigation, and Follow Through if Necessary
Finally, make it clear to the departing employee that you have counsel and that you intend to enforce the employment contract to protect your business and prevent raids on your employees. Have your lawyers ready if you discover the departing employee has violated his or her employment contract.
Call San Diego Corporate Law Today
If you would like more information about how to protect your staff from being raided by departing employees, contact attorney Michael J. Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached by email or by calling (858) 483-9200.