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Trading Secrets A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

When does LinkedIn Activity Violate Non-Solicitation Agreements?

Posted in Non-Compete Enforceability, Practice & Procedure, Social Media, Trade Secrets

LinkedIn is the biggest professional networking site in the world.  It has more than 225 million users in more than 200 countries and territories.  Approximately 75 million users are in the United States.  Many of those users have signed non-solicitation agreements with their employers prohibiting them from soliciting the employers’ customers and workers.  Unfortunately, many of those non-solicitation agreements are not well-suited to address somewhat unique solicitation issues related to LinkedIn usage.

This article is intended to highlight some inherent problems associated with attempting to govern post-employment LinkedIn activity through traditional non-solicitation agreements, and to encourage employers to review and revise such agreements to better address issues posed by LinkedIn usage.  While this article focuses on LinkedIn, similar issues arise from employees’ use of other social networks. 

The potential problem with traditional non-solicitation provisions and LinkedIn activity:

Many employers require their employees to sign agreements containing non-solicitation provisions prohibiting employees from soliciting the employers’ workers and customers after termination of their employment.  By way of example, a basic provision may look something like this:

Employee agrees that during his/her employment with the company and for one (1) year after any termination of his/her employment, Employee will not directly or indirectly solicit or attempt to solicit, divert or hire away any person employed by the Company or any customer of the Company.

While this type of non-solicitation provision may do a reasonably good job of addressing the traditional solicitation scenario (setting aside potential enforceability issues), LinkedIn poses a number of challenges for which traditional provisions are not necessarily a good fit. 

Consider, for example, what may happen when an employee leaves company X to go to work for company Y, a direct competitor to company X, and updates his LinkedIn profile to reflect his new position with company Y.  In simplified terms, a number of things are likely to occur.  First, the departed employee’s contacts will automatically get an “update” on their LinkedIn home page indicating that the departed employee has a new job and suggesting that they “congratulate” the employee.  Second, when the departed employee posts any messages, including messages about company Y, those messages will be automatically delivered to the employee’s contacts on their LinkedIn home pages.  Third, similar information may also be included in e-mails LinkedIn automatically sends to its users on a regular basis about their contacts.  Fourth, the departed employee may send messages through LinkedIn to individual recipients just like regular e-mail.  Finally, the departed employee may seek to “connect” with the former employer’s employees and customers through LinkedIn.

The above examples illustrate some of the special problems associated with LinkedIn in the non-solicitation context.  By a simple profile update, the departing employee’s entire network of contacts is immediately and automatically informed that the employee has left company X and is now working at company Y.  Similarly, the departing employee may effortlessly push information about company Y to his contact network, including, potentially the former employer’s employees and customers.  While in this largely automated process, a departing employee may not have any intent to solicit anyone, it is easy to see how an employer may have various degrees of discomfort with some or all of the above things depending on the type of activity, the message, the target audience and the employer’s overall sensitivity to solicitation issues.  The question is what activity a court will find to be in violation of a non-solicitation provision. 

Case law provides little guidance for when LinkedIn activity violates non-solicitation provisions:

A few years ago, our firm represented an employer in an employee and customer “raiding” case. Departing employees were alleged to have violated non-solicitation provisions by soliciting former co-workers to work for their new employer and to take the former employer’s customers with them.  In addition to more traditional violations of the non-solicitation provisions, there were potential violations where some of the departing employees’ former co-workers and customers received information through LinkedIn from some departing employees attempting to hype their new employer.  While annoying to the former employer, it was not clear whether the contents of the messages actually constituted “solicitations” as prohibited by the non-solicitation provisions.  It was also unclear whether the messages were specifically targeted at former co-workers or customers, or if all the departing employees’ LinkedIn contacts received the same messages.  At the time, it seemed like an interesting issue of first impression.  Unfortunately, the case settled before the court addressed whether the former employees’ LinkedIn activity violated their non-solicitation agreements. 

A few more recent cases have also involved allegations of impermissible LinkedIn solicitations.  For example, in TEKSystems v. Hammernick, a 2010 case filed in U.S. District Court for the District of Minnesota, TEKSystems filed suit against its former employee Hammernick for violating an agreement not to solicit TEKSystem’s employees and customers to go to its competitors.  Hammernick allegedly violated the agreement by communicating with TEKSystems employees via LinkedIn.  Unfortunately, this case also settled without resolving the issue of when LinkedIn activity constitutes an impermissible solicitation. 

Similarly, in Graziano v. NESCO Service Company, No. 1:09CV2661, 2011 U.S. Dist. LEXIS 33497 (N.D. Ohio Mar. 4, 2011), NESCO alleged that its former employee, Graziano, violated a severance agreement and non-solicitation provision which prohibited him from soliciting NESCO’s employees.  After Graziano was terminated, he set up a LinkedIn account and contacted some NESCO employees.  NESCO sent a cease and desist letter to Graziano, alleging that his conduct violated the non-solicitation provision.  When Graziano refused to stop his conduct, NESCO stopped paying severance benefits and Graziano filed suit against NESCO.  This case also settled without addressing whether the LinkedIn activity violated the non-solicitation agreement.

Presumably, there have been other disputes involving LinkedIn and non-solicitation agreements.  However, research has not uncovered any published court decisions specifically addressing when LinkedIn activity may violate a non-solicitation agreement.

 Considering LinkedIn activity in drafting non-solicitation agreements:

Given the special challenges posed by LinkedIn activity in the non-solicitation context and the dearth of cases addressing the issue, employers are wise to carefully consider how they want to handle their employees’ use of LinkedIn. 

In addition to customary and traditional non-solicitation provisions, employers would be wise to work with attorneys to consider specific provisions addressing how they want departing employees to conduct themselves with respect to LinkedIn accounts and post-employment activity.  Such provisions may include a combination of: (1) specifying the employer’s ownership of LinkedIn accounts and contacts; (2) requiring departing employees to delete LinkedIn accounts, or to relinquish control over accounts to their former employers; (3) imposing limits on employees’ contacts with co-workers and customers through LinkedIn; (4) requiring departing employees to delete LinkedIn contacts with co-workers and customers; and (5) requiring departing employees not to establish or re-establish such contacts through LinkedIn.

At the same time, employers must be mindful of the risk of violating employees’ rights, including under the National Labor Relations Act and applicable state laws.  Provisions that restrict employees’ mobility may not be enforceable, and courts may impose liability for requiring employees to enter into invalid agreements as a condition of employment.  For these reasons, and given the uncertainty of the law, employers would be wise to include severance clauses in their agreements in the event any particular provision is held to be invalid.