Are former employees using LinkedIn® as a tool for unfair competition?

Social media sites like Facebook® and LinkedIn present new opportunities for businesses. At the same time, they also present significant risks. As the legal landscape regarding social media continues to develop, business policies and practices must be revisited frequently to account for emerging issues. One such issue involves the use of social media as a tool for unfair competition. And, as demonstrated by a recent Massachusetts dispute, there could be costly consequences for not accounting for social media in this area.

In KNF&T, Inc. v. Muller, No. 13-3676 (Mass. Sup. Ct.), a staffing company claimed that its former vice president violated a non-solicitation agreement when she updated her LinkedIn status to show her new job and employer. The update sent a notice to over 500 of her contacts, including current and former clients of her former employer. KNF&T filed a lawsuit against the former vice president and her new employer, arguing that the announcement was a solicitation of new business prohibited by the non-solicitation agreement. KNF&T also moved for injunctive relief that would have severely restricted the former employee's and her new employer's activities. 

The Massachusetts Superior Court Judge held that the facts of this particular case did not warrant issuing a preliminary injunction. The Court found that the employee's new position in information technology recruiting did not directly compete with the type of work she was performing for KNF&T. With this finding, there was no need for the Court to resolve the issue of whether the LinkedIn notification violated the terms of the non-competition agreement on the facts presented. Nevertheless, the case provides valuable lessons for companies. For example, KNF&T could have better protected itself from what it viewed as an unfair solicitation by explicitly addressing social media in its non-solicitation agreement. And, the new employer might have avoided costly litigation and the potential for an adverse result by adopting policies and practices for new hires relating to social media announcements. 

Has your company accounted for social media in the measures it takes to prevent unfair competition and to minimize the risk of litigation? If you would like assistance creating or reviewing restrictive covenant agreements or developing best practices for new hires, or if you have questions about how to enforce existing agreements, please contact your Elarbee Thompson attorney for further discussion.