Jim Hunt Quoted in The Financial Times’ “Ignites” Article On Whether Updating Your Linkedin Profile Violates a Noncompete Agreement

on June 18, 2015 by Tenaglia & Hunt, P.A.

About to Update Your LinkedIn Profile? Not So Fast…

Article published on June 15, 2015
By Clare Trapasso

Warning: Professionals who update their LinkedIn profiles too quickly after switching jobs could get slapped with lawsuits.

The social media platform typically sends automated e-mail announcements to members’ networks, which can include former clients, when they change information about their job titles or add new companies. This could potentially violate non-solicitation agreements, which prohibit professionals from contacting their former customers for a specified period of time.

Most asset management firms require senior sales and investment management professionals to sign agreements that bar contact with former customers for a certain amount of time, say industry recruiters and attorneys. Typically, those contracts last for 30 to 90 days.

In fact, as many as 80% of asset management firms use some form of non-compete, estimates Lawrence Lieberman, senior managing director of the Orion Group, an industry recruitment firm located in Princeton, N.J.

Such agreements serve as a type of “penalty box” to punish departing employees by forcing them to wait before starting new ventures, he says.

Such agreements are designed to prevent workers from going to a competitor for a designated amount of time, and to protect companies’ customer bases in case workers do leave. Garden leaves, which are another common tactic, usually allow professionals to collect their base salaries until they can begin working at their new companies.

“In general, updating your [social media] profile typically doesn’t involve something overtly solicitous,” says Christopher Stief, chairman of the employee defection and trade secrets group at the law firm Fisher & Phillips. But “if you don’t want to run any of the risk … you should go in and change the settings so your updates are not automatically blasted out.”

For employers who do pursue lawsuits, the outcome varies greatly depending on which state and judge is involved, he says. In California, for example, non-competes are banned, and courts have permitted announcements to go out when an individual joins a new company, says Stief. But the laws are not quite as clear in other states.

“The problem is there’s not [enough court] decisions on it yet to generate any level of clarity,” Stief says of these cases.

Workers also should be careful not to provide too much information about their new positions on social media until terms of their agreements expire, he says. Whatever they write could be used as evidence in a dispute.

Stief also recommends that firms lay out clear guidelines in employment contracts for how staffers — and departing staffers — can use social media.

Financial advisors at Morgan Stanley Wealth Management must complete an online social media compliance program before they are allowed to use platforms like LinkedIn and Twitter, according to company officials. They must also access social media through the firm’s own systems, which stores the posts.

Meanwhile, staffers in the Chicago office of the London-based Henderson Global Investors are discouraged from talking about business on their social media accounts or accessing them while on the clock, says Alanna Nensel, director of U.S. marketing.

Donald Schroeder, a partner specializing in labor employment law at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, notes that posts could be used as written evidence of workers’ violating their agreements, even if they are later deleted.

Workers should also be careful not to post anything negative about their old companies on theirFacebook walls, even if their accounts are private, as their friends could include former colleagues and clients.

One worker found himself in hot water after a Michigan federal court ruled in 2010 in Amway Global v. Woodward that an employee’s LinkedIn and blog posts violated his non-compete and non-solicit agreements. The former worker had posted about switching companies, “If you knew what I knew, you would do what I do.”

Last year, the Superior Court of Connecticut found in BTS USA v. Executive Perspectives that a worker didn’t violate his non-compete agreement when he updated his LinkedIn profile and told his network in a post to check out his new company’s website. The court ruled that there was no evidence that clients of the business strategy consulting firm had seen the post.

“The more evidence you can show that an individual is trying to solicit and contact former [clients,] the more likely an employer would win the lawsuit and prevent the former employees from stealing customers,” says James Hunt, an attorney with Slater, Tenaglia, Fritz & Hunt, based in Rochelle Park, N.J.

Employers frequently monitor social media for potential agreement violations, says Blane Warrene, co-founder of QuonWarrene, an Orange, Calif.-based technology consulting firm for the financial services industry.

The Orion Group’s Lieberman says workers should attempt to leave their firms on good terms, so their former employers are less likely to go after them in court.

“It’s never a wise move to make the separation process any more contentious than it has to be,” Lieberman says.