Canadian Employment Law Today

November 11, 2015

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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cial networking websites, which was where the former employees argued they had ob- tained the information. Eagle was unable to prove it had a legitimate business interest to protect because the client list was public information available on social media web - sites and the non-solicitation clause was held unenforceable as a result. Eagle is also a cautionary tale for employ- ers to be careful about only prohibiting mere solicitation. e court warned that non- solicitation clauses that restrict "dealing" or "accepting" engagements with clients will be treated as non-competition clauses and subject to greater scrutiny — only upheld where there are exceptional circumstances. While some employers may wish to use re - strictive covenants to prohibit a former em- ployee from accepting requests to connect with clients via LinkedIn or having any con- tact with clients via social media, employers will need to ensure the restrictions are only as intrusive as is necessary. By prohibiting any contact with former clients including for purposes unrelated to the organization's business or social purposes, this is likely to be considered overreaching. When adapting restrictive covenants to address the risks posed by social media, em - ployers should be aware that employees are entitled to make a general announcement about their departure. Accordingly, it is not considered solicitation by a former em - ployee to post to followers that he is leav- ing an organization, or set a notification of a change in employment status on a personal social media account. However, an em- ployer could restrict social media postings by a former employee where the content of the posting uses confidential information or targets a specific group of company clients for the purposes of engaging in specific ac - tivities in which the employer has a legiti- mate interest. It's important to remember that, as with any employment law tool, restrictive cove- nants need to be customized to suit the orga- nization, as well as the specific position,and the responsibilities of the employee, and these requirements are no different in the context of social media. With that in mind, here are some key points to remember when drafting enforceable restrictive covenants: Evaluate the organization's legitimate business interests. In most circumstances, employers should be reluctant to ask lower- level employees to sign employment con - tracts containing non-competition clauses. Instead, the use of non-competition provi- sions should generally be limited to senior executives or employees with access to con- fidential files, key client contacts, or who could realistically pose a competitive threat upon leaving the organization. e nature of the employment is important as there could be more justification to impose a non-competition clause on a president than the receptionist. Further, consider whether or not these business interests can be ad - equately protected by a non-solicitation or confidentiality clause rather than by a non- competition clause. Limit restrictions contained in the clause. e scope of prohibited activity needs to be clearly defined and should be restricted to the duties and responsibili - ties which the employee had recently per- formed prior to the end of employment. A blanket prohibition on engaging in any activity with a competitor, including hold- ing shares, will likely not be upheld by a court. Also, the geographic scope of the non-competition clause must be limited to the location in which the employee had most recently worked during his employ - ment or the clients with whom the employ- ee worked. e duration of the restrictions should be guided by the length of time it will take to reduce the risk of a former employee attempting to solicit the organization's cli - ents, the employer's business cycle and the length of time to protect legitimate business interests. Generally, a period longer than 24 months is not likely to be enforceable unless there is a legitimate business justification. With non-solicitation clauses, the cov - enants should not overreach by prevent- ing the solicitation of prospective clients of whom an employee may have no awareness, or even past clients who have no connection with the departing employee. Rather, prohi - bition on solicitation of clients should be limited to clients with whom the employee was in direct contact prior to departing the employment relationship. Understand the distinction between non-solicitation and non-competition clauses. Non-competition clauses restrain activity that is not mere solicitation. If con - sideration is being given to restricting more than non-solicitation of clients — for exam- ple, "dealing" or "engaging" with clients — then these will be considered non-competi- tion obligations and scrutinized accordingly. Review covenants regularly. Most em- ployees change positions, or see their du- ties change, every few years. As such, the restrictive covenants in the employment agreement may no longer provide the ad- equate level of protection given the new responsibilities. Employment agreements should be reviewed and amended as the na- ture of the employment relationship evolves, particularly in the event of an employee's promotion or drastic change in duties and responsibilities. Also, the covenants should be regularly reviewed to ensure they are still in keeping with any developments in the law. For more information see: • Planit Search Inc. v. Mann, 2013 Carswel - lOnt 15233 (Ont. S.C.J.). • Eagle Professional Resources Inc. v. Mac- Mullin, 2013 CarswellOnt 7745 (Ont. S.C.J.). Canadian HR Reporter, a Thomson Reuters business 2015 CREDIT: DE-FOCUS/SHUTTERSTOCK November 11, 2015 | Canadian Employment Law Today ABOUT THE AUTHOR PAMELA CHAN Pamela Chan is a lawyer with Williams HR Law, a human resources law firm in Markham Ont., serving employers exclusively. She can be reached at (905) 205-0496 ext. 228 or pchan@williamshrlaw.com.

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