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Howard Levitt: There's a Right Way and a Wrong Way to Quit. Here's What the Wrong Way Looks Like

posted 2 years ago

Are you thinking of leaving your current employer to work for a competitor or set up your own business?

If so, there are only two ways to do so. The right way and the wrong way.

We have seen many examples illustrating the wrong way. Although infinite in variety, they have the following common features.

Usually they begin with the departing employee not seeking legal advice from an experienced employment lawyer. This leads to cascading errors.

Next the employee will not look at their written employment agreement, if they have one, to see what restrictions on using confidential information and soliciting customers, suppliers and employees might be contained therein. Even if there is no employment agreement, departing employees, especially senior or long-term employees, have common-law obligations which will affect what they can and cannot legally do when planning to depart, as well as after departure.

This omission is usually followed by downloading onto USB devices or external hard drives or emailing to their home, new employer or new business colleagues sensitive information such as customer and supplier contact information, financial information such as price lists, marketing plans or other information which would be helpful to the departing employee’s plans. Emails to such customers, suppliers or fellow employees soliciting their business or cooperation are similarly incriminating.

This error can be compounded by using company owned cellphones, laptops or desktop computers to send the information, which make it certain the employer can detect the transmission of such information. Even personally owned devices, if using the employer’s computer systems and emails, can be traced by the employer, and that information is usually stored on the employer’s own system. If you have company owned devices and you save personal information, such as personal banking records, your employer can access it.

Likewise, returning the company owned devices to the employer after “wiping” the records of such downloads or emails, so as to conceal those efforts, is highly incriminating. The employer will ask the court to draw an adverse inference that the deleted material was harmful. All you can legitimately do is delete all personal information — not any company information, even if you believe the company already has a record of it.

Keeping the company’s information at your home does not prevent the employer from being able to seize it as there are orders a court can make which would allow what are colloquially known as civil search warrants being executed at your home and those of any alleged co-conspirators.

Usually, departing employees who don’t follow good legal advice end up shooting themselves in both feet. If their efforts are detected while they are still employees, they will be fired for cause and the employer could obtain an injunction to prevent the departing employee from using any of that information rendering stillborn the new job or new business. Not to mention potentially crippling legal fees, if unsuccessful, in any litigation brought by the employer.

The right way is far simpler, less risky and much less expensive.

If you see an experienced employment law lawyer at the outset, you will know what you legally can and cannot do.

That lawyer can advise if you have any enforceable restrictive covenants and how to lawfully comply with them.

That lawyer can advise what information in the employer’s possession is too risky to take and also what you can take with impunity. Information accessible on the internet is one example. Thus, any customer or supplier information or contact details found through a Google search is fair game. Likewise, if the employer has circulated any information to such as price lists, it is public information and can be used by you.

Even if you are supplied with company owned devices, we recommend you own your own devices on which you put your personal information so that your employer has no access to it.

There are also different strategies which you can employ in your departure. You have a right to compete with your former employer. This has been reinforced by recent changes in Bill 27. Essentially, you can compete unless you have sold your business or are a senior executive or have an older enforceable contract, which is rare.

And there are perfectly legal ways to leave and compete although you may need to comply with certain restrictions. The restrictions usually do not prevent you form preparing to compete. Thus, after resigning, you can use the time to acquire the equipment or resources to begin competing the minute the restrictions expire.

If you announced your plans in advance, how would your employer react? One reason to make the announcement is to assure your employer you are doing so properly, which would assuage most.

Alternatively, you start your competitive business and be prepared in the event your employer objects.

However, if you have received legal advice and complied with your legal obligations you should have confidence in going forward with your plans.

BY HOWARD LEVITT AND ROBERT TAYLOR

Howard Levitt is Senior Partner of Levitt Sheikh, employment and labour lawyers with offices in Toronto and Hamilton. He practises employment law in eight provinces. He is the author of six books, including the Law of Dismissal in Canada. Robert Taylor is with Levitt Sheikh.

THIS ARTICLE ORIGINALLY APPEARED HERE: https://financialpost.com/fp-work/howard-levitt-theres-a-right-way-and-a-wrong-way-to-quit-heres-what-the-wrong-way-looks-like

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