How to stop social networking sites killing your restraint of trade clauses

Dave knew that he had a problem when he came into the office one morning to see a LinkedIn update saying that one of his former employee's had taken a senior position with his major competitor. But it wasn't the fact that Mandy had moved to his competitor that started the alarm bells ringing, but that he had received a notification of the move in his inbox - he knew that 70% of his client base would have received the same email and may flock towards her.

How Mandy ended up with 70% of his client list

Dave ran a very successful recruitment business. The success stemmed from his ability to be forward thinking. Over the last 3 years he had seen the effect social networking websites were having on the way people and businesses interacted. He knew that there was mileage to be made for his business in connecting with his clients in this way. As such, he encouraged his recruiters to set up LinkedIn and Facebook profiles so that they could announce new roles through these channels as well as the more traditional methods. 

Therefore, his recruiters would upload details of his client list in their LinkedIn profiles whereupon LinkedIn would invite those clients to connect with the recruiter. That's how Mandy ended up with 70% of Dave's client list in her LinkedIn profile.

Of course, when Mandy left, one of the first things she did was update her LinkedIn profile. As a result, when LinkedIn sent out its regular update email to her connections they found out that she had switched allegiances.

But, Mandy had a non-solicitation clause

Mandy's employment agreement contained a non-solicitation clause which prevented her from soliciting Dave's clients for a six month period. Dave had believed this was adequate to protect his interests. However, the law has generally regarded solicitation as being targeting specific clients in order to entice them away from the former employer. Untargeted advertising (e.g. placing an advert in a newspaper) has generally been considered as not specific enough to constitute solicitation because it is not directed at any specific individual. How the courts will now view updating a LinkedIn profile is yet to be seen, but for Dave the damage was already done. If one of his clients now approached Mandy, arguably she would not have solicited that client.

How could Dave have avoided this?

A helpful insight into Dave's problem can be found in a UK court decision which concerns LinkedIn. In that case, the court accepted that an employee uploading his employers contact list into his LinkedIn profile would amount to a breach of confidentiality. If such conduct was permitted by the employer (as it was in Dave and Mandy's case) then such permission was limited to the period of employment only.

The implication of this is that employer's would be permitted to require an employee leaving their employment to delete from their LinkedIn profile all client contacts gathered whilst they were employed. In essence, it would be no different to the employee returning a CD containing an Excel spreadsheet of the employer's client list or surrendering a copy of their Outlook address book. Such rights should either be contained in the employment agreement or a policy.

Dave didn't think of this

Unfortunately, Dave didn't think of this when Mandy left, and neither would many business owners. Mandy's employment agreement was not specific as to what confidential information should be returned on termination of employment and neither did Dave have an "acceptable IT use policy" in place which specified the conditions under which employees could use services like LinkedIn, Facebook or Twitter. Dave thought his non-solicitation clause would give him six months protection to re-establish the relationship with his database. Now, he had no breathing space at all and needed to act quickly to ensure that he didn't start losing clients to his opposition. 


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