Social networking websites function as a modern day Rolodex. Not only do these networks allow users to store all sorts of information about themselves, they also allow users to publicly "connect" to each other, which in turn enables them to view other members' information, which can include photos, current job information, resume, work history, education, contact information and a list of that member's other connections.
While many employers, particularly those involved in sales, are increasingly encouraging their employees to use these sites for advertising and marketing purposes, the perils and pitfalls in the context of restrictive covenants are obvious. They allow professionals of all kinds – salesmen, brokers, and agents, to name a few – to develop and maintain vast business and social relationships with great ease and little financial cost. For employers, who often devote significant resources to establishing long-lasting customer relationships and maintaining the confidentiality of their customers, a rogue employee's use of these social networking devices can be a recipe for disaster, particularly when it relates to monitoring and enforcing restrictive covenants.
Although online social networking has been around for almost a decade, very few American courts have addressed whether a former employee has violated a restrictive covenant based on the employee's social networking activities. See, e.g., Coface Collections North America Inc. v. Newton, 430 Fed. Appx. 162, (3rd Cir. 2011) (former owner of company, who among other things used LinkedIn account to compete with his former company, likely violated restrictive covenant; affirming district court's entry of preliminary injunction); Sasqua Group, Inc. v. Courtney, 2010 WL 3613855 (E.D.N.Y. Aug. 2, 2010) (denying TRO application, in part, based on defendant's position that her employer's contact list was not confidential or proprietary because clients had their contact information on Bloomberg, LinkedIn, Facebook and other publicly available databases); see also Hays Specialist Recruitment Ltd. v. Ions, et al., [2008] EWHC 745 (addressing situation where recruitment consultant used LinkedIn to start a competing recruiting agency)
Below are a few tips and other practical considerations for employers to consider in the context of social networking sites and restrictive covenants.
Tip 1: Advise employees that disclosure of confidential information on social networking sites is prohibited.
If client information is confidential, advise employees that identifying clients or having them as contacts on a social networking account could constitute a breach of the employee's confidentiality obligations or duty of loyalty to the company.
Most jurisdictions require that for client data to be protectable, the employer must take reasonable steps to protect it. An employer may undermine any argument that its non-compete or non-solicitation clause is reasonable to protect the company's legitimate business interests if the employer has encouraged or facilitated its employees' use of social networking activities without taking adequate steps to monitor or control these activities as they pertain to its clients or customer data.
At an exit interview or in connection with an employee's separation with the company, consider inquiring about the employee's social networking activities as they relate to his or her employment. Ask employees whether any client or customer information exists on their social networking account(s). If it does, request that this information be removed immediately.
Tip 2: Take immediate steps to preserve evidence.
Information maintained by employees on social networking sites can be valuable evidence of an employee's violation of a restrictive covenant. In Kelly Services v. Marzullo, 591 F. Supp. 2d 924 (E.D. Mich. 2008), for example, the court considered the job information listed on an employee's LinkedIn profile as evidence that a former employee was violating his agreement not to compete with, or solicit the customers of, his former employer.
If an employer learns of an employee's social networking activity that it believes violates a non-solicitation or other restrictive covenant, consider sending a cease and desist notice, including a specific request for the removal of any and all offending information. Most social networking sites allow users to restrict access to other users or immediately remove information. In addition, consider putting the new employer on notice as the former employee may have used the new employer's resources to post or communicate with clients and/or customers. Also, consider putting the website on notice (like the employer did in the Hays/Ions case discussed above), so that relevant data is not surreptitiously deleted.
Tip 3: Analogize social networking activities to more traditional forms of communication
A court will likely draw parallels between social networking activities and more traditional forms of communication like the telephone, letters or email. In Total Care Physicians v. O'Hara, (Del. Super. Ct. 2002), for example, the court concluded that a physician violated his non-solicitation agreement by sending patients a letter notifying them that he had moved to a new practice and touting his new practice's capabilities and services. If mailing a letter or emailing a customer would constitute unlawful solicitation in a particular jurisdiction, then updating a profile or electronically alerting the customer through a social network should constitute unlawful solicitation as well. The medium through which an employee chooses to unlawfully solicit should not make a difference. Indeed, the employer's chances of getting immediate injunctive relief, and of proving irreparable harm, may be easier to establish when a former employee uses a social network to solicit customers because of the employee's ability to reach such large numbers people so quickly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
