Considerations for Departing Executives
March 16, 2021
By: Colin A. Walker
When a C-Level executive separates from employment (by resignation, termination, or otherwise), there are a number of issues the executive should consider both to protect the executive from claims by the company and to preserve claims or protect their rights.
The executive generally should not take any information or documents of the company with him/her. Most executives sign IP agreements which provide that the company owns all intellectual property created by the executive during employment and, even without such an agreement, the employer will usually have the rights to such creations. Employees often get into trouble because they misunderstand this, incorrectly believing that since they created it, it is theirs. This is often compounded when an employee accumulates information on personal devices or emails it using a personal email address. In many cases, this will be legitimate, such as using a personal device on vacation when a company device is not available, but in other cases it can be done for nefarious reasons. As discussed in the previous post, a forensic computer consultant can usually track this down, exposing the executive to misappropriation claims.
The executive should return all company property. This includes electronic files which may have been saved on a personal computer for legitimate reasons. The executive should not delete electronic files without the company’s permission.
The executive may take information specifically related to the executive, such as payroll information, tax documents, offer letters and employment agreements, and healthcare information, and this will usually not be controversial.
If the executives believes he or she might have claims against the employer, such as discrimination, harassment, or whistleblowing claims, the executive should consider how to secure the evidence supporting such claims. Both the executive and the employer have a duty to preserve relevant evidence and not to destroy it. This provides some assurance that a departing executive will be available to obtain evidence through discovery in litigation if necessary. However, unscrupulous employers may not abide by such rules. While sanctions for “spoliation” of evidence can be harsh, sometimes evidence will be lost to the employee.
The law of most jurisdictions permits an employee to keep copies of documents which support claims. For example, if an executive has been sexually harassed by a supervisor by email, those emails will be evidence claims under federal or state anti-discrimination laws. However, as discussed above and in previous posts, the executive has a duty not to disclose or misuse an employer’s trade secrets and proprietary information. Sometimes there is overlap between evidence of legitimate claims by the executive and trade secrets and other proprietary information of the employer. In these cases, the rights of the executive to keep copies of documents should be carefully analyzed by legal counsel.
Because C-Level executives usually have access to their employer’s most sensitive information, an executive’s resignation or termination often involves complications which are not at issue when lower level employees separate. Executives are well advised to carefully consider issues that could arise and how to deal with them prior to the separation.
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