By Janie Byalik, Esq.
Many employers these days insist that its employees execute restrictive covenants as a condition to their employment. The restrictive covenant typically include non-compete and non-solicitation provisions. A non-compete agreement is intended to prevent an employee from setting up his or own her competing business or going to work for the employer’s competitor following termination of employment. A non-solicitation provision is utilized to prohibit ex-employees from diverting the employer’s customers or employees away from the employer for the benefit of the employee’s new competing business.
Restrictive covenants should carefully strike a balance between the employer’s interests in protecting its confidential information and relationship with its clients/employees and the ability of former employees to earn a living. New Jersey courts have consistently enforced post-employment restraints incident to an employment relation where the restrictions are reasonably necessary for the protection of the employer, and the restrictions are reasonably limited in duration and geographic extent. While in the past it has generally been simple to determine whether an ex-employee violated the terms of a non-compete and non-solicitation provision, the task is becoming increasingly difficult in the realm of the growing use of social media. Sites like Facebook, MySpace and LinkedIn has added a layer of complexity to the determination of whether an employee violates a restrictive covenant.
Consider the following situations: Employee A signs an employment contract containing a restrictive covenant prohibiting that employee from soliciting the former employer’s customers for a period of one-year following termination of employment. Just months after leaving employment, Employee A updates his or her LinkedIn profile advertising the new products/services that employee now sells, which the former employee’s clients can see. Is the act of updating the employee’s status constitute solicitation? Or what if Employee B, who also signed a non-compete provision, terminates employment, sets up a competing business within the permissible restrictions, and posts on his Facebook page information regarding his new employee incentive programs, salary and bonus, which is much more attractive than that of his ex-employer. If the former employer’s workers now seek to leave their current jobs and work for Employee B, has he violated the restrictive covenant by posting the announcement on Facebook? Does the mere “connection” on LinkedIn or “friending” on Facebook with a customer or former colleague of a terminated employee violate his restrictive covenant? Does compliance with restrictive covenants require former employees to un-connect or de-friend former customers or colleagues until the restrictive period ends?
The answer to these questions is far from clear and the law on this topic is still in its infancy. The most effective way for an employer to protect him or herself is to carefully draft the restrictive covenant provisions to account for the increasing social media capabilities. The employer should think carefully about drafting and tailoring the terms of its restrictive covenants to fit the specific circumstances of its business and adapt its policies to account for the changing social media technology. The more clear and concise the terms, the more likely a court will uphold the covenant so long as those terms are reasonable.