Q&A With … Kate O’Hara Gasper, LathropGPM

Kate O’Hara Gasper of Lathrop GPM represents clients in litigation and arbitration involving breach of contract, business torts, covenants not to compete, intellectual property, professional liability and insurance coverage.

Q: The nation has seen a historic increase in layoffs over the past month of the COVID-19 crisis. Given that people who have been laid off or are worried about getting losing their jobs may consider jumping to competitors, how should parties navigate their non-compete and non-solicit agreements?

A: Employers should explain to departing employees their post-employment contractual obligations and provide a copy with their agreement. Employers should also be mindful of protecting their confidential data, client contact lists, and other valuable business information while soon-to-be-terminated employees are working remotely from home.

Q: What about employees?

A: Terminated employees should not make any assumptions about the enforceability of their agreements; in Kansas and Missouri, non-compete agreements can still be valid, even around unforeseen events, such as COVID-19.

Q: Are you already seen in increase in inquiries regarding non-competes from people laid off?

A: Not just yet. It’s probably the calm before the storm, but any time there’s been a lot of mobility I the work force, we will. After the recession the last time, when people felt comfortable moving around, there was a huge uptick in litigation over these kinds of issues.

Q: Does that dynamic change with the sheer volume of sudden layoffs in such a short window?

A: We expect the same thing here, with people furloughed or laid off and looking for their next opportunity. Not every business is impacted the same way, and in a climate like this, some employers will still feel aggressive and may be looking for talent. This can be a growth opportunity for some, depending on their product or service.

Q: What kinds of roles present the greatest risk here?

A: We do a lot with sales representatives; their skill sets and talents are pretty transferrable to different items they’re selling. But it’s an issue that comes up on both sides. We represent the business, which could be an enforcement action against an employee who has left and is now working for a competing company. But we also represent employers and employees they have hired in defending against an unreasonable enforcement action.

Q: What are the general contours of actions?

A: There is a standard you have to pass that is reasonable to and fair to an employer’s interest, but not so much that it prohibits a former employee from earning a living.

Q: Have employers made adjustments based on lessons learned from the Great Recession?

A: One would think that people would learn from mistakes of the past, but these agreements typically are signed at very beginning of employment, and both parties are thinking of a hundred different things other than looking down the road when people may leave. I do think things will be more interesting this cycle, given the period of work from home people have had in recent years before being laid off.

Q: Does that create new concerns for employers?

A: Think employers need to be concerned theft of confidential information, seeing how people have moved to paperless and so much of everything is now on a network, and you have employees with access to so much information who are worried about paying the mortgage.

Q: What steps should they be taking?

A: They need to talk with IT professionals to see if they are protected It may be time to start putting better controls in place. They also might look at large amounts of data transfers external hard drives, that’s something that can be tracked. The best situation is that employers can hire back the same people. The reality is, employees who have been furloughed will take the first good opportunity. Employers can’t expect their  work force to be sitting around waiting to be hired back.