Tight Labor Market Heightens Importance Of Protecting IP & Other Data Against Departing Employee Risks

January 24, 2022

With employers increasingly competing for workers., U.S. businesses should shore-up legal and operational data security and intellectual property safeguards against misappropriation, misuse or damage by departing workers.

January, 2022 Bureau of Labor Statistics (“BLS”) data released January 21, 2022 confirms employee turnover continues to rise as employers compete for workers in today’s worker-strapped employment market.

BLS reported on January 21, 2022 that:

  • Job openings rates decreased in 16 states, increased in 3 states, and were little changed in 31 states and the District of Columbia on the last business day of November;
  • Quits rates increased in 22 states and decreased in 2 states; and
  • Total separations rates increased in 13 states.

See BLS State Job Openings and Labor Turnover Summary

The resulting competition for workers makes it increasingly difficult for businesses to retain and recruit sufficient workers to meet their operating needs.  The National Association of Manufacturers 2021 Fourth Quarter Manufacturers’ Outlook Survey released in December 2921 sighted the shortage of workers as a leading business concern. Meanwhile, a recent Goldman Sachs survey shows small business owners identify finding workers as their top business challenge.

With the pool of unemployed workers continuing to decline, employers understandably increasingly are looking to entice employed workers away from their existing positions. Consequently, savvy business leaders should recognize that along with working to recruit additional  workers to meet their growth needs, their organizations also need  tot take steps to retain key workers and protect against the loss of know how and intellectual property in the face of  stepped up efforts of other employers to recruit their valuable employees.

In recognition other businesses may target their best workers, businesses reliant upon labor competitive workforces should both to review existing compensation to deter against the loss of key workers and to strengthen their non competition, trade secret and other intellectual property safeguards to minimize intellectual property and other competitive risks that typically rise from another employer’s recruitment of a key employee.

When conducting these activities, businesses should start my re-evaluating their current employment, noncompete, trade secret and other practices both for market competitiveness and their legal effectiveness in light of widespread changes in market practices and legal rules.

Business concerned about protecting against the loss of workers or intellectual property  are cautioned to confirm that their policies and practices are reviewed and updated to take into account evolving market and legal rules and practices. Changing federal tax and other rules may impact the employer’s expectations and responsibilities concerning the tax and treatment of bonus or other golden handcuffs intended by the business to incent key workers to stay with the organization.  Along side with these changing rules, evolving federal antitrust enforcement guidance, state regulatory and enforcement precedent, and other  federal and state changes also may  impact traditional employer noncompetition, nonsolicitation, trade secret and other commonly used employee retention, intellectual property and other business intelligence safeguards.  Consequently businesses intending to use and rely upon these practices will want to review and update these practices to avoid unanticipated legal barriers to enforcement and maximize the reliability of these safeguards both against existing employees who may depart employment now, and the future separation of new recruits.

Beyond ensuring that legal policies and practices are up-to-date, employers also should consider whether their operational practices safeguard their data and other sensitive business information against misappropriation or misuse.  information requiring protection includes not only traditionally recognized trade secrets and confidential information critical to business competitiveness, as well as credit card and other personal and business information of customers and business partners, licenses, human resources, tax and other data that the business has a contractual or statutory obligation to protect against improper access, use or disclosure.  In addition to adopting appropriate privacy, investigation, background consent and other policies and procedures to position the company to legally monitor and investigate potential inappropriate dealings with these and other sensitive resources, savvy businesses will work with legal counsel to implement appropriate processes and procedures for ongoing prevention, monitoring and redress of suspicious access and other improper activities involving these materials. 

Furthermore, businesses also should consider the likelihood that departing workers may view their transition to new employment as freeing them to address past perceived wrongs by filing wage and hour, safety, whistleblower or other complaints, charges or litigation. In the face of these risks, employers will want to ensure that their existing wage and hour, harassment,safety and other workforce policies and practices are currently compliant as well as be prepared to respond to any allegations of past misconduct. Employers should carefully conduct exit interviews and investigate any alleged misconduct or other negative feedback to mitigate potential risks and liabilities. Employers also should consult with experienced employment and employee benefits counsel about appropriate design, administration and documentation of these policies, practices, arrangements and activities. Businesses also use special care to manage and relate to defend against whistleblower, interference and retaliation liabilities and claims given recently announced retaliation enforcement initiatives by the Equal Opportunity Commission, the Occupational Safety & Health Administration and other Department of Labor agencies. See e.g. Manage Heightened Retaliation Exposures Arising From COVID-19 Safety, Return-To-Work & Other Practices.

More Information

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About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Chair of the American Bar Association Intellectual Property Section Law Practice Management Committee and with a long history of leadership involvement in many other community, charitable, professional and other organizations, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant,  business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.

Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.

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