What to Do When an Employee Leaves You to Go to Work for Your Competitor

It’s a nightmare scenario, and yet it happens all the time. One of your top employees resigns their position and goes to work for a competitor, taking enough trade secrets with them to do irreparable harm to you and your company. What should you do?

Ideally, you should remain on good terms with the employee. We understand that’s not always possible, but to the extent that it is, we always recommend maintaining friendly (or at least civil) relationships with your employee whenever possible, because you never know what the future may hold. They might decide they don’t like working for your competitor as much as they thought and decide to come back to work for you – but only if you haven’t ruined that relationship.

The above is an example of the best-case scenario, but what about the worst-case scenario? That’s when your employee actively tries to take your business with them in the form of copying documents and/or recruiting clients (or even other employees) to follow them to their new place of employment. In that case, it can be much harder, or even impossible, to remain civil because they’re actions can be considered sabotage, but what can you do about it?

If the employee was in a position where they had access to sensitive information, trade secrets, and/or influential relationships with clients, then hopefully you had them sign an employment agreement that limited their ability to take your business to a competitor (assuming you live in a state that allows such contracts). If they start actively taking business away from you, it’s time to invoke that agreement. Let them (and their new employer) know that they are in breach of contract. Start with a cease and desist letter before you go straight to suing them, but if they persist, be prepared to take them to court. Some people will fight it out, while others will back off – even if the employee doesn’t back off, the new employer might, which would force the employee’s hand.

In addition to your own contract with the employee, remember there are other laws out there that protect your rights as a business. For example, the state of Illinois has the Illinois Trade Secrets Act, which makes it illegal for any employee or their new employer to take advantage of any information you have that could be deemed secret enough to give you a competitive advantage in the marketplace. There is also the federal Defend Trade Secrets Act.

Copyright laws can also work to your advantage, especially if you work in any kind of artistic or creative field. Most copyright laws protect any work created by any employee for the company as the property of the company, so anyone who tries to take their work or the work of any other employee with them when they leave could be in violation of copyright laws (as could their new employer).

Regardless of the outcome of the situation, there’s a lesson to be learned here when hiring new employees. First, don’t poach employees from your competitors in order to get trade secrets. Not only is it unethical and potentially leaves you vulnerable to breach of contract regarding that worker’s employment agreement, but an employee that can be poached once can be poached again, so they’re not necessarily the kind of person you want on your team.

You should also try to figure out, as much as you can, why the employee left. Were they offered more money? Did they not feel comfortable working for your company? Did they have a personal relationship with someone at your competitor that trumped whatever connection they felt to any of their coworkers at your company? Whatever the reason, try to find out what you can make your workplace more attractive, so you don’t run the risk of ending up in this same position all over again.

The attorneys at Lubin Austermuehle have over thirty years of experience defending and prosecuting employment termination related cases as well as trade-secret theft and copyright matters. We are committed to fighting for our clients' rights in the courtroom and at the negotiating table. Conveniently located in Chicago and Elmhurst, Illinois, we have successfully litigated non-compete and trade secret and covenant not to compete cases for clients all over the Chicago area. To schedule a consultation with one of our skilled attorneys, you can contact us online or give us a call at 630-333-0333.