In-House Counsel

Layoffs and Confidentiality

By Hanna

It used to be called downsizing or rightsizing, but in today’s economy it’s also been called streamlining, employee simplification, re-engineering, and cost improvement.  If business necessities are requiring reductions in your workforce you’ll want to carefully examine and document the criteria you used in establishing the short list.  Planning ahead avoids claims of illegal discrimination.  Think of it as an investment in shark repellant. 

For a good article on the subject on reductions in force, check out Mary Swanton’s article titled RIF Risks: Companies face layoff liability as the economy falters.

In addition, you’ll also want to review your employee exit procedures to make sure confidential trade secret information doesn’t leave when they do.  If confidentiality agreements have been signed, departing employees should be reminded about their post-employment duty of confidentiality. 

Passwords should be revoked.  I remember one case where a terminated sales person continued to access his voice mail messages and picked up leads in his old territory after he left the company.  It wasn’t until the company noticed a drop in sales in that geography that they realized what happened.

Soft language may soften the blow of losing a job, but if the termination process isn’t handle properly your business can be hit with hidden costs that far exceed any payroll savings.

Full post as published by Legal Literacy on November 13, 2008 (boomark / email).