Three-Prong Strategy to Deter Employee Sabotage

Despite a business’ best efforts to find, hire, train and retain valuable employees, sometimes rogue employees act in bad faith, look out only for themselves, and try to undermine and sabotage the business, steal its customers and employees and either set up their own competing business, or try to take customers and good employees to competitors. This can be devastating for a business, the entrepreneur and his/her family. Therefore, every business must take proactive steps to discourage this behavior using a three-prong strategy: 1) using “Hug Me” documents; 2) educating employees; and 3) having employees sign an annual compliance certification.

Have every employee sign the following “Hug Me” documents, prepared by the company’s Private Corporate Counsel:
1. Non-Compete Agreement
2. Non-Disclosure and Confidentiality Agreement
3. Trade Secret and Other IP Agreement
4. Loyalty and Non-Solicitation Agreement
5. Computer Use Agreement

We call these documents “Hug Me” documents because they hug the company, providing a protective barrier between the company and its internal and external stakeholders. While most employers are familiar with non-compete agreements and confidentiality agreements, many are not as familiar with the other agreements. Trade Secret and Other IP Agreements specifically identify what the business’ trade secrets and intellectual property, clarify that the business owns these secrets and IP, regardless if the employees help to create them, specify the permitted uses, and prohibits unauthorized use and disclosure. Loyalty and Non-Solicitation Agreements reaffirm the employee’s duty of loyalty to the business and prevents the employees from soliciting the business’ customers and employees for personal or third party use or benefit. This agreement is helpful to prevent employees from stealing customers and employees. Computer Use Agreements clarify the permitted uses of the business’ computers, software, and communication tools, and discourage bad uses, such as personal use.

2. Educate employees about the ramifications of violating the agreements, including being sued for injunctive relief, damages and punitive damages. We encourage employers to continually educate and train their employees. This is a good business practice for several obvious reasons. For example, regularly trained employees are more likely to perform consistently and predictably, grow and develop personally and professionally, and tend to be loyal. Training can also be a great tool to discourage bad behavior. For example, employees are less likely to think about taking customers or other employees with him if he leaves the business if he receives regular training about what happens to employees who are bad actors. Cases studies, such as Werner Enterprises, Inc. v. Mendez and Stallings, can be a very useful tool for this training. In that case, Mendez and Stallings, while they were still employed by Werner, conspired with another business to solicit several of Werner’s employees to resign their employment and move to the new company. They acted specifically to undermine Werner’s business by establishing a new office for the new company in Jacksonville that would be staffed by experienced Werner employees and serve Werner’s customers. Because of this behavior, the Court specifically allowed Werner to ask for injunctive relief, damages and punitive damages against Mendez and Stallings because they were personally guilty of intentional conduct as they had actual knowledge of the wrongfulness of their conduct and the high probability that it will harm Werner, but intentionally pursued the course of conduct. Employers can provide training themselves, using members of their leadership team or other team members, or hire professionals, such as their Private Corporate Counsel, to provide this training.

3. Have employees sign an annual certification that they have complied with the business’ “Hug Me” documents, policies and procedures. When your employees sign your “Hug Me” documents, you educate and train them on their obligations, duties, and responsibilities, you further educate and train them about the ramifications of violations, and they annually certify that they have complied, they are likely to be compliant and less likely to steal customers and employees or otherwise sabotage the business. In the unlikely event that they do violate any of the agreements, policy, or procedure, because the business was diligent in following this tree-prong strategy, its case against the rogue employee will be stronger, and will likely be resolved faster and cheaper than it would have otherwise. Private Corporate Counsel can help your business deter employee sabotage using the above three-prong strategy. To schedule a consultation, please call 407-647-7887 or email us at info@pcc.law.