Your Top Talent Walks Out the Door: Now What? How to Stop Your Competitors from Raiding Your Workforce and Engaging in Unfair Competition in the U.S. and Canada Wednesday, June 9, 2010 Sponsored by the Employment Law Alliance © Employment Law Alliance

Introduction -2- © Employment Law Alliance

Presenters Linda H. Joseph, Moderator, Schröder, Joseph & Associates, LLP, Buffalo, NY Betty S.W. Graumlich, Reed Smith LLP, Richmond, VA Steven M. Gutierrez, Holland & Hart LLP, Denver, CO, -3- © Employment Law Alliance

Presenters Gregory J. Heywood, Roper Greyell, Vancouver, British Columbia, Canada Andrew H. Smith, Director, Associate General Counsel, Citigroup, New York, NY Barry M. Willoughby, Young Conaway Stargatt & Taylor, LLP, Wilmington, DE -4- © Employment Law Alliance

What Happens When They Walk Out? -5- © Employment Law Alliance Exit letters to employees enclosing the agreement Preliminary injunction actions

Drafting Permissible Restrictions Make sure it is part of a valid employment contract Avoid Boilerplate Covenants Regional differences: time limitations/ geographic limitations/scope limitations Make sure it is reasonable: narrow the time, place, and activity Understand the non-compete statute of the state in which you do business -6- © Employment Law Alliance

Drafting Permissible Restrictions Non-solicit/non compete Confidentiality provisions (definition of confidential information, UTSA protections, time restrictions) Patents/Intellectual Property ownership Bluelining v. segregation provisions Liquidated Damages Provisions Provisions granting consent to send the agreement to new employers -7- © Employment Law Alliance

Drafting Permissible Restrictions “Re-write” States: Courts can re-write overbroad non-competes to limit restrictions to facts at issue. “Blue Pencil” States: Courts cannot modify agreement, BUT… –They can enforce separate lawful covenants within the contract, and –Strike language where changes are grammatically possible “Public Policy” States: Non-competes are prohibited as a matter of public policy -8- © Employment Law Alliance

Preventing a Temporary Restraining Order Fiduciary duties Contracts Advice to prospective employee Hiring groups of employees Chinese Walls Doctrine of Inevitable Disclosure -9- © Employment Law Alliance

Test for Injunctions/ Proof of Damages Regional differences With agreement Without agreement Bonding -10- © Employment Law Alliance

Strategies Audit your Internal Security policies Demand letter Damages or injunction? Temporary restraining order v. preliminary injunction – does it matter? Sue employee, employer, or both? -11- © Employment Law Alliance

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