LinkedIn and Restrictive Covenants: Issues and Potential Pitfalls to Consider in the Age of Social Media

Posted by Kenneth N. Winkler on

Albert Einstein once stated, “Technological progress is like an axe in the hands of a pathological criminal.”  Given the chance, Einstein may have enjoyed the opportunity to post a blog on relativity or to befriend Sigmund Freud on Facebook. But as stories of suicidal “cyber-bullying” and Tiger Woods’ “sexting” headline daily tabloids, it appears that Einstein’s cautionary observation is as applicable today as ever.  Indeed, a recently filed lawsuit alleging unlawful solicitation through the use of social media highlights the dangers both employees and employers face through the use of social media in the workplace.

Litigation Involving LinkedIn®
In March 2010, TEKsystems Inc., a Maryland company engaged in the business of recruiting, employing and providing the services of technical, industrial and office personnel, filed a lawsuit in the United States District Court for the District of Minnesota against three former employees Brelyn Hammernick, Quinn Van Gorden, Michael Hoolihan, and their new employer, Horizontal Integration, Inc.  At first blush, the lawsuit appears to be a “vanilla” unfair competition case alleging a sundry of claims including breach of contract, breach of duty of loyalty, misappropriation of trade secrets, and tortious interference with contract.  What is somewhat unusual, however, is that the complaint specifically alleges that one of the former employees violated a non-solicitation covenant by contacting TEKsystems’ contract employees through her use of LinkedIn®.  In particular, the Complaint alleges that Hammernick improperly communicated with at least twenty TEKsystems’ contract employees and messaged an invitation to have them visit her new office and “hear about some of the stuff we are working on.”

Whether such activity on LinkedIn® (or other business and personal social networking sites) would constitute a breach of a non-solicitation of employees covenant under Georgia law is uncertain. It is also uncertain whether similar activity directed at customers would constitute a breach of a non-solicitation of customers covenant.  There do not appear to be any reported decisions considering whether evidence of such communications and messages on LinkedIn® constitutes solicitation.  The absence of such decisions results, in large part, from the nature of litigation involving restrictive covenants.  As in many states, cases in Georgia involving restrictive covenants are often heavily litigated and largely decided at the injunctive relief stage.  At this stage, based on Georgia’s strict laws on restrictive covenants, the enforceability of the covenants is usually the determinative issue.  While the former employer will undoubtedly present evidence in support of its request for injunctive relief that the employee has breached or intends to breach the restrictive covenants, nearly all Georgia appellate decisions reviewing the grant or denial of injunctive relief focus on the trial court’s ruling on the enforceability of the covenants, rather than the validity of such evidence and whether a breach has occurred or is likely to occur.

Thus, Georgia appellate courts have had rare occasion to specifically consider and address what evidence will or will not support a claim for breach of a non-solicitation covenant.  In Roberts, Ltd. v. Parker, 215 Ga. App. 310 (1994), a former employee brought suit against his former employer to enforce its payment obligations under his severance package.  The employee had entered into a non-competition agreement as part of that package.  When the employer learned that the employee had joined a competitor, the employer ceased making payments.  In support of its defense that the employee’s breach of the non-competition agreement terminated its payment obligations, the employer introduced evidence that the employee had sent a series of letters to clients of the employer in which he offered his assistance.  The trial court found that these letters were not efforts to solicit business and directed a verdict in favor of the employee for the amount owed by the employer pursuant to the severance agreement.  However, the Court of Appeals reversed the trial court’s ruling and held that the factual determination of whether the letters were a “solicitation” must be made by the jury.

Georgia’s body of appellate law does not provide much insight as to what conduct on LinkedIn® might constitute evidence of solicitation in a lawsuit regarding a former employee’s restrictive covenants.  Undoubtedly, if an employer is able to obtain evidence of LinkedIn® activity where the former employee is actively soliciting his or her old customers, such evidence can be used to support the employer’s request for injunctive relief.

What Types of Activity May Constitute Unlawful Solicitation?
If courts are called upon to answer what kind of LinkedIn® activity will support a claim for breach of a non-solicitation covenant, such cases will likely be decided on their own specific facts and circumstances.  As a general matter, courts will likely treat communications within LinkedIn® the same as they treat other forms of communication.  For example, a message directed to a LinkedIn® contact offering to sell a product to the contact would obviously be deemed a solicitation.  Other types of communications unique to LinkedIn®, however, raise interesting issues as to which it may not be as easy to predict the outcome:
  •  A sales representative bound by a non-solicitation of customers covenant resigns employment from Acme, Inc. to work for a competitor.  He then sends a notice throughout his LinkedIn® network announcing that he is newly employed and goes on to explain his job duties and responsibilities and the products he is selling. Some of his LinkedIn® contacts are customers that he serviced while employed by Acme, Inc. and some are Acme, Inc. customers with whom he sold products to prior to joining Acme, Inc.  Would his notice constitute an improper solicitation?
  • Would the outcome change in the above scenario if the sales representative added certain key Acme, Inc. customer contacts to his LinkedIn® account immediately before he resigned from Acme, Inc.  Would it matter if the sales representative created his LinkedIn® account and added his contacts after he knew he was resigning and just before he actually resigned?
  • If the sales representative writes an article about “Effective Customer Service” and sends a message to all of his LinkedIn® contacts with a link to the article, would this activity constitute a solicitation?
  • If the sales representative started a discussion about “Effective Customer Service”, would this activity constitute a solicitation?
These scenarios suggest that the nature and degree of the LinkedIn® activity is likely to be an important factor in determining whether an individual has violated a non-solicitation covenant.  As the law tries to catch up with technology, LinkedIn® usage will increasingly be the focus of discovery in litigation involving restrictive covenants.

Notably, the Georgia legislature recently passed a law reforming Georgia’s law on restrictive covenants.  If an amendment to the Georgia Constitution is approved by the voters in a ballot referendum this fall, this new law will go into effect. The new law will permit judges in Georgia to modify or “blue pencil” overly broad restrictive covenants.  Thus, judges may soon no longer be required to strike down overly broad covenants as unenforceable, as they must under current law.  If this change occurs, litigation involving restrictive covenants will likely become less focused on the narrow question of whether a covenant is enforceable.  Instead, the key battles in litigation over restrictive covenants will likely become more centered on the question of what restraints are reasonable and how far an overly broad covenant should be pared down.  It is also possible that more cases will survive the injunctive relief stage and be litigated on the merits.  As a result, both Georgia trial and appellate courts may have the opportunity to address the question of what conduct constitutes “solicitation”, so as to support a claim for breach of a non-solicitation covenant.  If they do, they will undoubtedly confront and potentially answer the questions raised by this article regarding LinkedIn® activity.

Proactive Steps to Combat Post Employment LinkedIn® Solicitation
Absent affirmative action and policies by a company concerning LinkedIn® profiles and activity, a company is likely to have difficulty asserting ownership and control over information, contacts, and relationships which a departing employee has on his or her LinkedIn® account. This is true for several reasons.  First, an employee’s LinkedIn® account may pre-date the start of his or her employment. Like the business contacts in a Rolodex, which were in an employee’s possession prior to the start of employment and which the employee brings with him or her on the first day of his or her employment, pre-existing information and contacts on LinkedIn® do not automatically become the property of the new employer when the employee joins the company, absent agreements or policies otherwise.  Therefore, a company will have significant difficulty forcing an employee to “return” information or contacts found on his or her LinkedIn® page, or “shut down” a LinkedIn® account, when the account pre-dates the start of employment.

Second, while LinkedIn® has become the “business” version of the social media sites, many users may view LinkedIn® as less of a business tool and more of a personal way of “keeping in touch” that is an alternative to other sites such as Facebook and MySpace. Furthermore, a LinkedIn® profile page does not merely duplicate a biography page which might appear on a company website.  Rather, it contains past job history and education information and is thus arguably somewhat akin to an online resume.  These varied perspectives on LinkedIn® use may make it difficult for an employer to persuade a court that it owns information or contacts on a former employee’s LinkedIn® account, if the employer does not have policies specifying as such. Finally, information on LinkedIn®, including an employee’s LinkedIn® contacts, is publicly available to anyone who is connected to the employee on LinkedIn®. This can have significant implications if an employer is seeking to protect that same information as trade secrets or confidential information which the employee has acquired in the course of his or her employment.  As a threshold matter, if the information is publicly available and easily ascertainable, it may be challenging for an employer to demonstrate that it has taken reasonable steps to protect the secrecy of the information for which it is seeking protection.  Similarly, an employer may be less concerned about information on LinkedIn® but may be alarmed because the employee intentionally took a tangible customer list when he or she left the company. The employee’s “contacts” on LinkedIn® may make it difficult for an employer to claim that the list constitutes a trade secret.  That is, if the employee could independently re-create the information contained on the list using the contacts in his or her LinkedIn® profile, the list may not be entitled to protection under many states’ trade secrets laws.  Furthermore, an employee’s LinkedIn® contacts may not be the exclusive outlet from which the employee could potentially re-create a customer list, as the information which the employer is seeking to protect may be found in the employee’s contact lists on other social media outlets, such as Facebook or MySpace.

Conclusion
In this day and age, employers are strongly advised to consider whether profile pages and accounts on social media outlets such as LinkedIn® may have information which employers may wish to protect as their own. Employees are similarly advised to be cognizant of the fact that their employers may increasingly exert control over information on social media through terms in employment agreements and through company policies. Employees should also be aware that post-employment activity on social media outlets such as LinkedIn® can potentially subject them to claims for breach of non-solicitation covenants in their employment agreements.

For employers, carefully developing social media policies, electronic usage policies and modifying employment agreements to adequately address these issues will give them the best chance of obtaining the protection they may undoubtedly want to have.  For example, it may prudent to include specific references to LinkedIn®, Facebook, and Twitter and other social media in non-solicitation covenants so employees clearly understand that they cannot solicit customers and prospective customers using such media.  Finally, employers should not overlook the importance of educating employees from orientation through separation about the company’s policies regarding the protection of trade secrets and the employee’s obligation to abide by the company’s restrictive covenants where applicable.