HR CORNER - “I Got a Better Offer and I’m Leaving. Oh, and I’m Taking the Whole Staff With Me!”

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Shorts on Long Term Care Newsletter

09.01.2007

Louis B. Meyer III

A recent news article reported on a lawsuit by the parent company of two newspapers against two former senior executives, claiming that the defendants quit and took other key newspaper employees and business information with them to start a new, competing newspaper. The lawsuit also claimed that the former senior executives were planning the new publication while still working at the parent company’s newspapers and caused the other key newspaper employees to leave as a group on the same day.

The same situation can occur in long term care when management employees, including administrators, nursing directors, and department heads decide to change jobs and take key staff with them. The difficulty of attracting and retaining quality staff in medical professions these days, especially in long term care, makes this a troubling reality, not just a “what if” situation. So what can you do to help avoid a “brain drain” at your facility?

Use and enforcement of non-compete agreements or other contractual restrictions on a key employee’s post-termination activities may be part of a company’s strategy for protection from “pirating” by a key employee who leaves to join or become a competitor. But there are other precautions a company can take in this situation. For example, an exit interview process provides a valuable opportunity to discuss important items with the departing employee and help secure the company’s customers, business information, and workforce. If there is advance notice of the employee’s departure, this process can take place in a series of interviews and “debriefings.” If not, a comprehensive exit interview on the employee’s last day may be sufficient.

Here are some objectives a company may wish to accomplish in an exit interview process upon a key employee’s departure:

Make sure the employee returns all company property, especially any materials that may contain the company’s business or customer information, before he or she leaves. This includes any data the employee has on a laptop or home computer related to the company, his or her work for the company, and the company’s business with customers.
Determine whether the employee has any personal notebooks, pocket calendars, Rolodexes, business card collections, etc. that contain information about the company, his or her work for the company, or its business with customers. If the information was acquired or developed during the employee’s relationship with the company, the company should be entitled to keep, or at least make copies of these items.
If there is advance notice of the employee’s departure, make sure the employee introduces and transitions customers to his or her replacement, or send a manager to secure those customer relationships.
Remind the employee of any “confidentiality” policy or other applicable company policies, as well as any non-compete agreement or other contractual restriction he or she has signed, and make sure he or she has a copy of any such policies and agreements.
Find out if the exiting employee has obtained or is seeking new employment and assess whether it would provide him or her with an opportunity to solicit any of the company’s customers for sales of competitive products or to otherwise compete against the company.
Find out whether the employee has contacted customers he or she served during the relationship with the company to inform them of new employment, and determine whether the employee has indicated that he or she will contact them on behalf of the new employer.
If the employee’s new employment will conflict with any non-compete agreement or other signed contractual restriction, confirm that the new employer has been informed of the non-compete agreement or other contractual restriction.
Determine whether the employee has talked with any of the company’s other employees about the possibility of leaving or any opportunities that may exist for them with the employee’s new employer.

Absent a non-compete agreement or other contractual restriction on a key employee’s post-termination activities, it may be difficult for a company to prevent some customers and employees from following a key employee who leaves to join or become a competitor. However, taking some of these precautions may help the company limit its losses.

Physical Address: 301 Fayetteville Street, Suite 1900, Raleigh, NC 27601

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09.01.2007