Using Exit Interviews to Protect Trade Secrets

Conducting an exit interview of a departing employee serves a number of useful purposes. At times, one of those purposes is to further the employer’s goal of protecting its trade secrets and other confidential and proprietary information from misappropriation. With that purpose in mind, here are some practices to consider when conducting exit interviews.

     Prepare for the interview: Special thought should be given to an interview that is going to be conducted with a departing employee who has had access to the employer’s confidential information. Before the interview occurs, the prospective interviewer should consider, with input from the employee’s supervisor:

• The specific confidential information at issue, such as customer information, technology or negative research.

• The agreements in place with the departing employee that serve to assist the employer in protecting that confidential information, such as a confidentiality agreement, a covenant not to compete, a non-solicitation agreement, or an agreement not to retain any confidential information.

• Any intelligence the employer already has on the employee’s future plans, such as whether the employee is taking a position with the employer’s competitor where the employer’s confidential information would benefit the competitor.

• Any intelligence the employer already has that the employee has engaged in disturbing, dishonest or suspicious behavior. For instance: The employee has made unusual downloads of confidential information or the employee is taking a job in violation of a covenant not to compete that is enforceable under the applicable law. If these circumstances are present, the employer’s attorney should be consulted before the interview occurs, if possible.

Before the exit interview occurs, also consider the particular employee’s personality and how best to conduct the exit interview to keep the employee chatty and relaxed.

Likewise, consider who is best to conduct the exit interview in light of the employee’s personality. Although HR may routinely conduct exit interviews, the employee’s supervisor is likely to have more substantive knowledge about the confidential information and the employee’s work and will be better able to determine whether the employee is a threat to the employer’s confidential information. On the other hand, the supervisor may make the employee nervous and less forthcoming.

Although, in theory, HR and the supervisor could conduct the exit interview together, the more interviewers there are, the more likely the employee is to “clam up.” There should be no firm rule as to who should conduct an exit interview. Instead, the particular circumstances (including the employee’s personality and relationship with the supervisor) should be considered in deciding who is best to conduct the particular interview.

The interview should be planned with all of these special factors in mind. Otherwise, the employer may miss a potential opportunity to further its goal of protecting its confidential information.

The exit interview: The exit interview can and should be used to remind employees of their ongoing obligations related to the protection of the employer’s confidential information, and to attempt to determine whether the employee will abide by those obligations.

Often such obligations are based on agreements with the employee. Consider reviewing those agreements with the employee at the exit interview in order to assess:

Whether the employee has an overly narrow view of his or her obligations.

• Whether the employee considers confidential information to be in the public domain.

• Whether the employee asserts that the agreements are unenforceable.

Consider asking employees to sign at the exit interview an acknowledgement of:

• Receipt of copies of any such agreements that they may have with the employer.

• Their understanding of the ongoing nature of the obligations.

• Their confirmation that they intend to abide by their obligations.

Any refusals to sign such an acknowledgement may signal that there is a threat to the employer’s confidential information.

The obligation for the employee not to retain confidential information should be addressed in detail at the exit interview. The interviewer should not simply ask, “Have you returned all company property?” Instead, the interviewer should review with the employee the various items of company property that the employee needs to return. Then the interviewer should consider probing even further.

The interviewer should make clear to the employee that the obligation includes confidential information maintained (including in electronic form) at home, in the trunk of a car, on a personal computer, on a cell phone and on a hand-held device.

The interviewer should also make clear that the obligation includes the obligation not to retain any copies. For instance, the fact that the employee gives the employer a copy of a confidential customer contact list is not sufficient. Instead, the employee must make sure that he or she does not retain any copies on a personal computer, personal e-mail account or cell phone.

After that, if the interview reveals that the employee has in fact retained confidential information—inadvertently or otherwise—the interviewer should not, as a knee-jerk response, tell the employee to destroy the documents or files. Instead, the interviewer should say he or she will get back to the employee about how the employer wants to address the outstanding confidential information. Depending on the circumstances, the employer may want to make copies of the documents or files retained by the employee and any related metadata. These steps will help the employer see if the confidential information was forwarded to anyone else, which may be useful in the event of future litigation.

The interviewer may want to take notes during the interview. At the same time, however, the interviewer should not take such copious notes that the employee becomes uncomfortable or gets suspicious and stops talking. The interviewer will want to keep the employee engaged and talkative during the interview.

On the other hand, if the employee says something that indicates there is a threat to the employer’s confidential information, the interviewer should not make light of it simply to keep the interview going. In the same vein, the interviewer should take care to not agree, even inadvertently, with the employee’s assertions that the employer’s agreements or policies are invalid, unenforceable or unclear.

To that end, the interviewer should take care to avoid nervous or unintentional use of “OK,” “Yes” or “Yup.” Although such words are natural in conversation, they are dangerous in the context of a dispute between the employer and employee. The employee may attempt to use such statements by the interviewer against the employer in future litigation.

Under no circumstances should any misrepresentations be made to the employee. Those misrepresentations may keep the employee talking, but they will only lead to trouble for the employer in the future. If a difficult subject comes up during the exit interview that was not contemplated during preparation, the interviewer should just say, “I will have to get back to you on that.”

Also, the interviewer should be careful about making demands on the employee during the exit interview in an effort to protect the employer’s confidential information. For example, while refusing to give the employee his or her final paycheck until all company property is returned may seem to be a logical step, such a refusal may violate labor laws. Accordingly, the interviewer should consult with the employer’s legal counsel to consider whether any proposed steps comply with law and are best suited for the situation at hand.

The interviewer should listen carefully to the employee’s answers, questions and comments during the interview and consider follow-up questions rather than blindly follow a set list of questions. The interviewer should not simply check the box and move on. For example, if the employee states that “career opportunities” were a factor in the decision to leave the organization, the interviewer should consider asking what those career opportunities are and then, if appropriate, probe into the nature of the employee’s new position to ascertain whether there is a possibility that the departing employee may misappropriate the employer’s confidential information.

If the new position raises concern, the interviewer may also want to consider asking the employee how the employee can do the new job without breaching the obligations to the soon-to-be-former employer. The employee’s answer may provide valuable admissions for use in litigation to demonstrate that there is an actual threat to the former employer’s confidential information. Ordinarily, it will not be easy to get such an admission and the interviewer will need to approach this area with some finesse. For example:

• Interviewer: “Yes, we need the customer contact book back for our records, but is that going to be a problem for you in your new job?” Employee: “Gee, I made a copy of the customer book to consult it in my new position.”

• Interviewer: “How can you do that new job without using our customer information?” Employee: “I can’t—so I plan to use it. But I don’t agree with you that the customer information is the employer’s confidential information.”

The interviewer also should consider fishing for evidence that the employee has already started work for the new employer in breach of a duty of loyalty to the employer. For example, the interviewer could ask: “When do you expect to start with your new employer? Can we get your new contact information there? Is that contact information effective now?”

If the interviewer asks questions about the new employment, care should be taken not to solicit from the employee any of the new employer’s confidential information. The interviewer should consider expressly instructing the employee that he or she is not to disclose any of the new employer’s confidential information and that none of the interview questions should be construed as calling for such information.

Follow-up: If an employee denies during the exit interview that he or she has ongoing obligations to the employer, those statements can assist the employer in establishing in litigation that there is a threat to the employer’s confidential information. In turn, this can allow the employer to obtain an injunction against the employee. Consider memorializing such statements by the employee during the exit interview in a memo to the employer’s counsel. The interviewer should consider, with guidance from the employer’s counsel, preparing a second, non-privileged memo to be placed in the employee’s personnel file.

Further, any repudiation of the employee’s obligations to protect confidential information should be brought to the attention of the employer’s attorney immediately so counsel can assess what action is appropriate in response.

It is important that threatened misappropriation be addressed immediately. Misappropriation can cause irreparable harm to the employer if not prevented—as the saying goes, you can’t unring a bell. Further, the employer’s attorney might recommend marshaling and preserving evidence so it is not lost as the company goes about normal post-termination activities, such as wiping the employee’s hard drive and reassigning the computer to another worker.

Exit interviews differ depending on the particular circumstances at hand. The conversations can be hard to predict, and at times exit interviewers will simply have to use their best judgment. But with these guidelines in mind, they’ll be better able to shape the conversation with the end of protecting valuable company information.

Workforce Management Online, April 2010 — Register Now!

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.