What should a company do if a former employee joins a competitor?
If the company has trade secrets, it may be concerned that the employee will share those secrets with the new employer. Faced with this situation, the company may opt to send a letter to the new employer. This option does not come, however, without risk.
In a recent case from the federal district court in Michigan, Bonds v. Philips Ellectronics, a company sent a letter to a former employee who had joined a competitor. A copy of the letter was forwarded to the employee’s new employer. In the letter, the company warned the former employee about the employee’s obligations to maintain the confidentiality of information.The employee’s new employer fired the employee a few days later. Unemployed, the employee then sued his former employer for sending the letter which he claimed was the cause of his termination.
Thecourt rejected the employee’s claim, but only after carefully considering the contents of the letter. The court held that the letter contained “strong, assertive language” but did not call for the employee’s termination. Rather, the letter raised concerns about the employee’s obligations under his confidentiality agreements and the potential disclosure of confidential information. Accordingly, the court concluded that the letter was motivated by the legitimate business reason of preventing the improper use of confidential business information.
The opinion strongly suggests that the court would have reached a a different conclusion (or at least wouild have had a more difficult decision) if the letter had explicitly requested the termination of the employee. There is a risk, therefore, for employers when they send a letter to a former employee’s new employer. Unless the letter is properly drafted, an employee may have a claim against his former employer for interfering with his contract with his new employer if he loses his job or suffers any other adverse consequence.