If your business manufactures apparel, footwear, or accessories, many of your employees will eventually go to companies you consider competitors. While working for you, these employees were entrusted with all sorts of information you consider confidential—everything from designs and business plans to more esoteric items like methods of doing business. Naturally, you do not want that confidential information finding its way to your competitors.
But if the worst does happen, and something tells you that a competitor has hired your former employee and appears to be taking advantage of your confidential information, you may very well be correct to suspect underhanded motives by both the competitor and your departed employees. But consider an alternate theory. Perhaps the reason your “secret sauce” is no longer secret has less to do with another’s nefarious intent, and more to do with the fact that during your exit interview with that departing employee (if you had one at all), you effectively said little more than “Olé!” as the employee walked out the door not fully understanding his or her obligations to you.
Consider this real life example from a recent lawsuit I was involved in. “Employee” gave notice to “Company” that he was leaving for an outfit that Company considered a competitor. To help safeguard confidential information, Company chose to say goodbye to the employee the day he gave notice. So far, so good. Company then gave Employee an exit interview. Still looking good. To that end, Company had previously developed a comprehensive written exit interview questionnaire, which listed detailed reminders for the interviewer to address, including to (1) provide a copy and confirm understanding of Company’s confidentiality agreement; (2) remind a departing employee of the continuing obligation not to disclose confidential information; and (3) confirm that the departing employee did not possess any confidential information, whether hard copies or in digital form. Looking even better. But when Company later sued Employee for failing to return company information, it came to light that the person who gave the exit interview not only did not have a good recollection of what she asked the Employee at the interview (i.e., she did not memorialize it), but did not even use the questionnaire at the exit interview. Not so good.
There is no way around it: Company just flat out blew it.
So what should you do to avoid a similar gaffe? At a minimum, you would be wise to do the following:
1. Train your HR Department about the importance of the exit interview (namely, as a key tool to remind the departing employee of continuing obligations regarding confidential information (for the information that is in the employee’s noodle) and return of any confidential information (for the information that is on paper or digital).
2. Ask where the employee is going, which should help direct the focus of your questions and determine whether it is a good idea to keep them around. If the employee refuses to answer, assume that they are going to a competitor.
3. Prior to the interview, talk to the employee’s supervisor to understand the particular items of information the employee was privy to. Understand and have with you all documents (agreements, handbooks, policies, job descriptions) that outline the employee’s ongoing confidentiality obligations.
4. Meticulously review those ongoing obligations with the employee, showing the employee the particular language. And while it is great to tell an employee not to disclose “confidential information,” to the extent you can, since you have spoken to the employee’s supervisor (see above), to the extent you can, be specific (e.g., the Spring Collection Line Sheet, etc.).
5. Get the company’s property back pronto: phones, laptops, portable media, access cards, and the like.
6. Investigate what might be offsite. This does not mean asking the worthless question, “Do you have any company documents or information?” That is sure to get a thoughtless “no” response. Rather, methodically ask about the locations where the employee may have hard copy documents lying around—the car, the home office, the nightstand, and so on. And perhaps more importantly, go through the locations where sensitive electronic data may reside: the employee’s personal smartphone, tablet, personal computer, personal email, portable media, and cloud storage. If there’s a hit, determine how best to ensure the information is returned or, if a copy, deleted.
7. Have the employee sign an acknowledgment of what was discussed (confirming the employee has or will return or discard confidential information and reaffirming continuing confidentiality obligations).
While an exit interview may not completely prevent confidential information from leaking out, in the scenario above there is no way around it: Indeed, if done and documented meaningfully, an exit interview has two benefits: (1) it should significantly reduce the chance that confidential information gets out in the open; and (2) if litigation results, you have good evidence that lead to a quicker resolution.
This article is for informational purposes only and not for the purpose of providing legal advice. You should contact legal counsel to obtain advice with respect to your particular issues.
