An Employee Leaves ... Now What?

28 May 2019 Labor & Employment Law Perspectives Blog
Authors: Kevin E. Hyde

Whether an employee leaves for another job or because the employer decided it was time for the employee to go, employers typically have to figure out how to replace a departing worker.  

Sometimes, the break is clean. Other times, it can be complicated. Regardless of the reason or circumstance, now-former employees may have post-employment obligations to the business or organization that employers should immediately consider and, if necessary, act upon.  

Some steps to take: 

First, inventory the obligations the employee assumed upon hire or during the course of employment.  These obligations may be in standard new-hire paperwork completed by all employees, or may be particular to an individual due to his or her unique position or job responsibilities, or as part of an employment contract.  

These obligations may include agreements related to confidentiality, nondisclosure, nonsolicitation, noncompetition, reimbursement for advances or relocation expenses, return of property, etc. Often an employer will have an exit interview or post-employment checklist detailing these obligations. But sadly, these checklists may only exist in a soon-to-be closed personnel file and are not communicated to the departing employee. 

Second, after inventorying the obligations, communicate your expectations to the former employee about compliance. For instance, send the former employee a letter outlining each of the agreements to which he or she was subject and the employer’s expectations about compliance. The communication need not be threatening, but rather should establish that the employer expects compliance. This approach will help prevent any potential misunderstanding by the former employee that the obligations are being waived.

Third, get a clear understanding as to what the obligations really are. It is critical that the employer have reasonable expectations as to what the former employee is obligated to do or not do. Employers may assume, for example, that a noncompetition or nonsolicitation agreement is broader than it is actually is.  

Suppose the nonsolicitation agreement allows a former employee to go to work for a competitor, but prevents him from soliciting the customers of his former employer. Clear enough. But is the new employer prevented from accepting business from those customers? Depending on state law, nonsolicitation covenants generally will not prohibit employees who are contacted by the former employer's customers from accepting that work, so long as no solicitation occurs. In these situations, the language of the agreement is critical and the employer must understand the breadth or limit of the agreement before taking action against the former employee. The line may be very fine. Consider these examples: 

  • An employer might not receive an injunction prohibiting a former employee from having any contact with former customers when the agreement only prohibited solicitations for “sales, services or supplies” from the prior customers. 
  • An agreement providing that former employees would not “call upon, solicit, divert or take away,” or attempt to solicit any clients, would not necessarily prevent former employees from accepting business from former clients who actively sought their assistance.

Fourth, decide early on what efforts will be made to collect obligations due from the former employee.  For example, many employers reimburse an employee’s relocation expenses and require repayment if the employee fails to remain employed for a specified period of time. If a former employee refuses to reimburse the employer, a small claims action (depending on the amount) may be an effective and relatively inexpensive way to recover the money and demonstrate the employer’s commitment to enforcing the former employee’s obligations. Similar actions could be taken to force the return of property or for the protection of intellectual property. 

These are just a few examples of things to think about after an employee leaves. While you will probably (and properly) be focused on finding someone else to do the work, you can’t forget to take basic steps at the outset to protect the employer’s continuing rights. 

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