Canadian HR Reporter

November 16, 2015

Canadian HR Reporter is the national journal of human resource management. It features the latest workplace news, HR best practices, employment law commentary and tools and tips for employers to get the most out of their workforce.

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CANADIAN HR REPORTER November 16, 2015 2 NEWS Recent stories posted on Check the website daily for quick news hits from across Canada and around the world. WEB O N T H E ACROSS CANADA Bombardier not done with transformation; reviewing strategic options, says CEO CEO won't rule out job cuts as company turns focus to improving effi ciency Cuts continue in oil and gas sector as companies struggle to reduce costs Cenovus to end year with 24 per cent fewer staff Average salary increases projected at 2.6 per cent in 2016: Survey Fewer employees saw increases in 2015 than 2014 Advocacy group wants living wage, but CFIB says that's not feasible Group calculated wage of $16.77 per hour Trudeau promises Wynne federal help with new Ontario pension plan 'ORPP being designed to integrate with any future CPP enhancement' AROUND THE WORLD Swedish unions seek 2.8 per cent wage hike with tacit central bank support Wage level 'won't jeopardize competitiveness': Unions European energy execs see bleak market outlook persisting More takeovers possible as energy fi rms remain under pressure U.S. labour costs rise in third quarter; infl ation still benign Employment Cost Index increased 0.6 per cent Some major U.K. fi rms, civil service to adopt 'blind recruitment' policy to reduce bias Organizations will recruit without knowing applicants' names: Reports Deutsche Bank cutting 15,000 jobs as new CEO sets out strategy plan Cautions 2016, 2017 won't be strong years e power of resilience How can resilience completely change a person's experience of work? Andrew Soren, an expert on positive psychology, sat down with Canadian HR Reporter TV to explain. FEATURED VIDEO her employment, going to the competition and going after your customers, according to Stuart Rudner, founding partner at Rud- ner MacDonald in Toronto. "However, there are duties of confi dentiality which survive the end of the employment relation- ship and they can't take confi den- tial information and either use it to their advantage or give it to somebody else who can then use it to their advantage. " at's where this case, if the allegations are true, might be dif- ferent from the typical case where someone just leaves and goes to a competitor." Executive poaching is always a concern, and if people start steal- ing trade secrets and confi dential information, the court has put in- herent value on that proprietary information, said George Avraam, partner at Baker & McKenzie in Toronto. "It's still their property so in- junctive relief is all the more so ap- propriate in those cases because you can't even quantify it, what the money is," he said. "If there's a proceeding, ulti- mately, you may win on the li- ability aspect but not necessarily on the damages aspect. But if the objective is to get the documents or the property information back, most employers don't care about the damages, they want the prop- erty back, so you bring an injunc- tion trying to get that… What you want is the destruction and them not using it." Restrictive covenants Many organizations try to add protection by using restrictive covenants such as non-compe- tition clauses or non-solicitation clauses in employee contracts or agreements. But these are not foolproof. "What's interesting and comes as a surprise to many people is, generally speaking, non-compe- tition clauses will not be enforced in Canada. e courts see them as too much of an infringement upon an individual's ability to have a living," said Rudner. Generally, the courts have said they'll only enforce restrictive covenants if they are reasonably necessary and the terms are rea- sonable, he said. "Non-competes usually fall by the wayside because the courts say they're not reasonably necessary, and what they'll say is you as an employer should be able to protect yourself by having a non-solicita- tion clause, which doesn't prevent your former employee from going to a competitor but it does prevent (those particular claims) for a cer- tain period of time." If you ask for too much, the court won't fi x it, said Rudner: " ey will just strike out the clause." e courts are loath to enforce non-competes — they view them as a restraint of trade, depriving people of the ability to work, said Avraam. "What the courts have said is there are other tools you can use in contracts: protection of confi - dential information in a contract; non-solicitation of clients and employees. And, candidly, those are good to have in paper because parties are attuned to it. But you don't need a contract to prevent somebody from stealing your in- formation and using it elsewhere — it's just pure theft, is what it is." Most employers still use some form of non-competition because the courts haven't said they're al- ways unenforceable, they're just diffi cult to enforce, he said. So em- ployers would want some kind of non-competition clause that is not too long or too broad in terms of scope, particularly for executives. And if an employer is dealing with an executive who is likely to have fi duciary duties that survive either a termination of employ- ment or resignation, employers still have the tools, even without a contract, to bring litigation for- ward and seek an injunction, said Avraam, such as confi dential infor- mation going to a new employer. "In some ways, it's actually eas- ier when it's an executive because of the fi duciary duties owed." It's not uncommon for a former employer to send a cease and desist letter to a former employee and es- sentially warn her it is aware or sus- pects she is breaching its restrictive covenant and it is going to monitor the situation and take appropriate action if necessary, he said. "In some cases, it's a bluff ; in some cases, the company knows that it won't be enforceable but they're just hoping to intimidate the employee; and, in other cases, they're legitimately waiting to see if there is loss and if so, then they'll pursue it in court." To have any legal cause of ac- tion, an employer has to show the defendant breached some sort of legal obligation and it suff ered some damages or loss as a result, said Rudner. "Sometimes, you see situa- tions where an individual has a non-solicitation clause and they left and were blatantly soliciting clients but none of the clients ac- tually followed them, so the for- mer employer is going to have a hard time proving damages. ey might be able to if they can show that it damaged their reputation or made some people less willing to do business with them in the fu- ture, but it's a much more diffi cult claim to prove if you really didn't lose anything." Other safeguards Aside from legal safeguards, there other ways employers can try to combat potential espionage. For one, maintaining good relation- ships, said Rudner. "Organizations really expose themselves when they don't have their own relationship with a cus- tomer and the only person that the customer knows is one individual who may leave, so… protect your- self by cultivating your own rela- tionships with customers." People often steal what they have access to every day, so if they're disgruntled and planning to leave, they might take the stuff they're working with, which is why it's important to do a risk as- sessment, said Shaw, who investi- gates insider cases. "It undermines a lot of what we call DLP or data loss prevention technology because it's looking for people who have unusual activity... if I'm a personal banker at a large company, I'm interacting with my clients and their accounts on a daily basis. But if I get disgruntled and leave, it doesn't look unusual for me to be interacting with those accounts, so it's not going to regis- ter on a technical system." Increasingly, the focus is on managers and HR staff to recog- nize disgruntlement, recognize people at risk and work with secu- rity and others to intervene early, said Shaw, adding he works with software that picks up dissatisfac- tion in online communications "If you even get a whiff that someone's thinking about leaving, you want to look at their copying, downloading, etcetera, to see if it's unusual. at's become almost universal now," he said. "A lot of people attack after termination because they still have access, so that's another area where HR could be a big player is helping people do assessments of risk be- fore they take personnel actions." It's also about keeping employ- ees happy, said Rudner. "Occasionally, I have calls from employers who complain a com- petitor is coming in and poach- ing their best employees and, of course, they want us to take im- mediate action to stop that, which is often not possible. One of the things I say is ' e best way to pre- vent it is to keep your employees happy.'" Ideally, employers want to keep their talent but they still need those safeguards, said Avraam. "You can try to keep a director happy all they want but if there's an opportunity (for them) to be- come a VP somewhere else, they have career aspirations." Covenants must be deemed 'reasonable' ESPIONAGE < pg. 1 Compelling patterns There are key behaviours and indicators that contribute to intellectual property (IP) theft by malicious insiders and these are the most compelling patterns: They are often in technical positions: The majority of IP theft is committed by male employees averaging about 37 years of age who serve in positions including engineers, scientists, managers and programmers. They typically have a new job already: About 65 per cent of employees who commit insider IP theft had already accepted positions with a competing company or started their own company. About 20 per cent were recruited by an outsider and 25 per cent gave the stolen IP to a foreign company or country. In addition, more than one-half steal data within a month of leaving. They generally steal information they are authorized to access: People take the data they know, work with and often feel entitled to in some way. Trade secrets are the most common IP type stolen: Trade secrets are stolen in more than one-half of cases, followed by business information such as billing information, price lists and other administrative data; source code; proprietary software; customer information and business plans. Key patterns precede their departure and theft: Common problems probably contribute to an insider's motivation, such as personal psychological predispositions and stressful events. Professional setbacks can fast-track the stealing: Acceleration on the pathway to insider theft occurs when the employee gets tired of "thinking about it" and decides to take action or is solicited by others to do so. This move often occurs on the heels of a perceived professional setback or unmet expectations. Source: Behavioral Risk Indicators of Malicious Insider Theft of Intellectual Property: Misreading the Writing on the Wall, Symantec

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