Half of employees who left or lost their jobs keep confidential corporate data after they’ve left, according to a 2013 study. [i] This is not surprising since many employees, in performing their work duties, routinely have access to, and work with, their employer’s confidential or proprietary information. Smart phones, laptops, email and file hosting services like Dropbox or Box allow employees greater flexibly to work remotely or outside of normal office hours, which benefits employers, but also means that employees are likely to have this information in their possession when the employment ends. Most employers have policies requiring employees to return this information upon separation. Even so, when the employment relationship ends, there are several reasons why employees may take the data with them, such as inadvertence, neglect, or a misperception about industry custom.
What then should an attorney do when her client, who has been wrongfully discharged, has not returned the information belonging to her former employer? If the employment was recently terminated, then the employee is probably best advised to immediately return the information directly to her former employer. But otherwise, there is little legal guidance for how the client’s attorney should handle returning such information, and the employee’s retention of information belonging to her former employer can have devastating consequences for the client and her attorney. Although attorneys may differ about how to approach this issue, our firm has successfully used the following approach to avoid the numerous pitfalls that this issue may present:
First, the attorney should ask the client what information she has retained from her former employment, including any electronically stored information.
Attorneys routinely ask clients to provide documents that would support the employment claims or otherwise typically be exchanged in discovery. As part of the intake process, the attorney should also ask what other information the client retains from her former employment. Ask about the different places where the information is stored and how the client first came to be in possession of the information. Ask whether the client erased or destroyed work files after the discharge and, if so, why. Encourage the client to be forthcoming. Remind her that an employer can easily ascertain if the client attempted to delete electrically stored information, or email files to her own personal email account. Explain the potential risks to the client’s case if this issue is not thoroughly addressed at the outset.
Second, the attorney should take custody of the information and preserve it.
If the attorney determines that the client still retains information belonging to the former employer, then the attorney should take custody of the information. Depending on where the information is stored, the attorney can take physical custody of the client’s laptop or other equipment, secure access to the client’s file hosting account, or scan the client’s electronically stored information. This eliminates the possibility of the information being used, disclosed, or lost by the client. Removing the threat of use or disclosure reduces the likelihood that the employer will file a motion for injunctive relief seeking the immediate return of the information on grounds that its disclosure would cause irreparable harm to the employer.
Third, once the attorney has taken custody of the information from her client, she should separate the client’s information from that belonging to the former employer.
Information that legitimately belongs to the client includes the client’s employment agreement, personnel and payroll records, feedback about the client’s performance, communications to or from the employer about the underlying dispute, and so forth. Separate this information from that which the employer’s attorney would likely argue is privileged, confidential or trade secret. A “trade secret” is defined by statute. [ii] It includes information that derives independent economic value from not being generally known to the public, and is the subject of reasonable efforts to maintain its secrecy, such as customer information, marketing strategies and marketing plans, pricing and cost information, plans and designs for the employer’s product, detailed software design concepts, and source code for a computer program used to manufacture the employer’s product. This information, which in most cases proves to be irrelevant to the client’s employment claims anyway, should be returned.
Before returning the information to the employer, the attorney should mark it for identification.
Marking the information for identification allows everyone to refer to it by number rather than description—much like an exhibit at trial or in a deposition—and defines the scope of information that the attorney obtained from the client and will turn over to the employer’s counsel. The attorney should make two copies of the information, one for herself and the other to return to the employer’s counsel.
Finally, the attorney should notify opposing counsel and return the information.
The client’s attorney, with the client’s authorization, should draft and send the employer’s counsel a letter stating the following:
- the attorney has information belonging to the employer that she would like to return,
- the information has been preserved in the attorney’s custody and marked for identification,
- the information is being returned to the employer’s counsel,
- in addition to being returned to the employer, the attorney proposes to retain a copy of the information for her own records, since it is likely relevant and discoverable, and
- the attorney, upon notice, will immediately turn over her copy of any confidential or proprietary information to the employer’s attorney, without prejudice to appropriately seek the same information in discovery.
This last point is important because the client’s attorney may not retain confidential information taken from the employer by her client, and the fact that the information is not privileged does not justify self-help. [iii]
This approach can allow the attorney to focus on pursuing the client’s employment claims, rather than defending the client against the employer’s claims for misappropriation, conversion or breach of contract. It mitigates your client’s exposure for damages and fees resulting from the alleged misappropriation, and reduces the likelihood that the employer will able to obtain an injunction. Preserving and maintaining the information protects against claims of spoliation, which in the most egregious cases can result in terminating sanctions. It allows the attorney to uphold the law[iv], avoid disqualification, and fulfill her legal obligation to produce evidence. [v] Plus, it preserves the attorney’s credibility with opposing counsel. This approach also is better than the alternatives, considering an injunction from the court ordering the return of information is the “least sanction” appropriate in such cases. [vi]
Being proactive about returning proprietary information to your client’s former employer may not only save your case, but also keep your client out of trouble.
About the Author:
Aaron Minnis is a partner at Minnis & Smallets LLP, a San Francisco law firm, where he advises and represents individuals in employment law matters.
This article originally appeared in the ACBA Labor and Employment Section’s July 2015 Newsletter.