When three employees of a publishing company left their jobs to start a new company of their own in competition with their former employer, they wanted to hit the ground running, so they issued a press release inviting their network of contacts to an informal event. One of the three had been managing four LinkedIn groups on behalf of their employer and they used the lists of connections in those groups as a source of email addresses to target the contacts they wanted to invite.
When the employers found out, they challenged the ex-employees who refused to give up the key usernames, passwords and logins. To protect their business interests, the employer applied to the court for an injunction to stop the three employees continuing to use what the employers regarded as their confidential information.
But were the contacts lists really confidential if they were out there on LinkedIn? Did those lists really belong to the employer, especially when LinkedIn say in their user agreement: ‘The profile you create on LinkedIn will become part of LinkedIn and except for the information that you license to us is owned by LinkedIn. However, between you and others, your account belongs to you?’ These were some of the issues the High Court had to address in a recent case.
The court sided with the employer in this particular instance. It found that the employees had crossed the line and were actively competing with their old employer and were therefore in breach of duties of fidelity and good faith. Other surrounding facts didn’t help the employees’ cause. For example, before they left, they had tried to poach at least one member of staff and had taken and copied 450 business cards belonging to the employer. The employee managing the LinkedIn groups also had no computer at home, so she only ever used the employer’s PC when networking on LinkedIn.
Nonetheless, the law in this area is developing more slowly than the advances in technology and the changes in working practices they have led to. It remains very uncertain and a court judging another set of circumstances could well distinguish the facts of the ‘LinkedIn Three’s’ case and reach a different verdict.
What if an employee’s use of LinkedIn was both personal and business? How do you decide which contacts belong to whom? Supposing an employee arrived in a new job as an existing member of a LinkedIn group – who then owns his list of contacts?
Most employers have already realised there is an enormous potential in social media such as LinkedIn and Facebook for developing their businesses by increasing their network of contacts online. What they perhaps don’t appreciate are the risks they run when an employee is allowed more or less unfettered access to their lists of customers and clients in this way, especially when they quit the business.
The lesson for employers is that they must take control of social media use in their businesses. They should, for example, make sure there are clear written procedures and policies in place so that all social media use by employees is to promote the employers’ businesses, and that the content posted and the groups joined are appropriate and approved. Consider stipulating expressly that ownership of professional contacts lists on LinkedIn is theirs and not their employees’. Access passwords should always be held by more than one person and must be handed over when an employee leaves.
Employers might also consider tightening up the restrictive covenants in employment contracts to make sure that employees are made aware that, after they leave their job, the updating of their LinkedIn profiles to refer to their new employer and notifying all their connections of this, will be regarded as soliciting or, more likely, dealing with the employers’ clients and therefore in breach of those covenants.
For employers the widespread use of social media in business now presents both enormous opportunities for business development but also a whole raft of potential legal pitfalls for the unprepared. If you would like advice on how to make sure your employment contracts and policies are in place to protect your business interests contact Stephen Watmore in our Employment department for further advice.
This article should not be taken as a full statement of the law. It should be regarded purely as guidance and is no substitute for professional advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be accepted by Wiseman Lee LLP. © Wiseman Lee LLP 2013