Protecting Your Business Interests when Employees Leave

Posted on 06/30/2020

Business owners pour time, money, and focus into their business. They invest in their employees, provide them with training and certification, and offer them upward mobility within the company. Inevitably, however, they may lose those employees to a competitor, or an employee may leave the company to start their own business. 

Employee retention is an ongoing challenge, and at times, it can be devastating.

The reality is there is no surefire way to prevent an employee from leaving. But business owners can take some steps to protect their business interests when an employee chooses to leave. 

Read on for five ways to protect your business when employees leave.

Employment Contract 
Employment law varies from state to state, so it’s best to consult with an attorney to review and/or draft employment contracts that meet the legal requirements in your state or jurisdiction, while building in some protective measures for your business. There are various clauses that may be built into employment contracts, and it’s important to consult legal counsel regarding your options, as well as for assistance in crafting contract language that will actually be considered enforceable and reasonable within the law. 

Non-Compete Clause
A non-compete clause is designed to limit the freedom of an employee to work elsewhere in a particular manner after his/her employment has ended. With a non-compete clause, the employee can be prevented temporarily from working for a competitor, and potentially causing harm to your company. What’s fair and reasonable can vary from state to state and across jurisdictions, therefore, check with an attorney before adopting any non-compete agreement. Typically, to be enforceable, a non-compete agreement has to balance the potential for unfair competition against an individual’s right to earn a living. Jurisdictions typically define what’s reasonable in scope and duration for non-compete clauses. 

Non-Solicitation Clause
A non-solicitation agreement is a contract in which an employee agrees not to solicit a company’s customers for his or her own benefit – or for the benefit of a competitor – for a defined period of time after leaving the company. Typically, non-solicitation agreements will not be enforceable unless they are determined to be reasonable, meaning they don’t go beyond what is necessary to protect an employer’s legitimate business interests. Unlike non-compete agreements, which seek to prohibit former employees from working in the same field or profession within a certain geographic area for a particular period of time, non-solicitation agreements may have a better chance of being upheld if they are viewed as a legitimate effort by a business to protect its goodwill.

Confidentiality Clause
When performing their work, employees may get familiar with confidential information of the employer or business relations. To provide that employees will treat this kind of information carefully, a confidentiality clause can be included in the employment contract. A confidentiality clause determines that the employee with observe secrecy toward confidential information, both during and after employment. Confidentiality agreements can protect private company information like financial details, business strategies, customer lists, or products and services underway or in development, and prevent employees from communicating or profiting from sensitive information. As with other employment contract clauses and agreements, it’s important to consult an attorney to determine what will be considered reasonable within the law in order to ensure the agreement will be enforceable.

Repayment Agreements
Business owners may also want to consult an attorney for consideration of instituting repayment agreements in which an employee agrees to reimburse the company for company-paid certification and training costs if they leave the company without a certain period of time. Again, employment law varies by jurisdiction, and there may be requirements such that in order to enforce repayment agreements, the training/certification must be voluntary and not specific to the employer’s operations. 

A Word about NADCA Certifications
NADCA periodically receives inquiries from member companies who have paid for their employee to become certified and then leave the company. It is important to note that certifications belong to the certified individual, regardless of who has paid for it. NADCA cannot in any way revoke the individual’s certification or reimburse the expense to the employer. 

If you have an employee who is ASCS- or CVI-certified leave your company, please notify NADCA’s Membership Coordinator at membership@nadca.com so the individual’s employment status can be updated in our records. If that person decided to work for another company, and wishes to have a new certificate issued, they must submit a certification transfer form and fee. If they work for a non-member company, they will be required to pay a non-member rate for all future ASCS and CVI certification renewals, as well as any NADCA training or certification they wish to pursue. 

While there’s no way to prevent your employees from leaving your company, consulting with legal counsel to review your employment contracts and determine the appropriate options and language that will meet the legal standard in your jurisdiction can be highly beneficial in helping protect your business interests.

Article originally written by Kristy Cohen, NADCA Executive Director, for DucTales magazine.
 

Type: 
Industry News