Maintaining Business Confidentialities
Updated: Jul 30, 2021
Dear Clients and Friends,
Keeping confidential information confidential is a popular and ongoing employer/employee contest. Here is an FYI case which may be of help in your own business practices and policies regarding confidential information in your work place:
Anthony Leness was an executive at a company called EventMonitor. His contract stated that he couldn’t disclose confidential information and that he would return all such information if he left the company.
After six years, Leness was terminated. The company then discovered that he had subscribed to an online data storage service and had uploaded a large number of the company’s files, including confidential data.
The company changed the status of his termination to “for cause,” and cut off his severance payments.
Lennes sued and the Massachusetts Supreme Court sided with him. They said Leness couldn’t be fired “for cause” because he didn’t breach his contract in any significant way. It’s true that he didn’t return all the confidential information when he was let go, but the company couldn’t prove that he ever disclosed the information or shared it with anyone else. Therefore the company wasn’t harmed by his actions.
Some businesses have been trying to deal with this issue by putting “liquidated damages” clauses in their employment contracts. These clauses acknowledge that it can be difficult to value the harm to a company caused by an employee keeping confidential data. Therefore, employees agree that they will pay the company a specified amount of money as damages if it’s discovered that they broke the rules.
It’s not clear if these clauses will always be upheld in court. But the mere possibility of having to pay damages can often discourage employees from taking confidential information with them in the first place, which is the real goal.
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