Last year, a Connecticut court found that a LinkedIn notification was not a solicitation under an employment agreement. In BTS USA Inc. v. Executive Perspectives LLC, an employee of BTS, Marshall Bergmann, left to join a direct competitor. Shortly after joining the competitor, Bergmann posted his new job to his LinkedIn account, sending out a notification to anyone linked to him. He also posted an invitation to “check out” the competitor’s new website. Bergmann’s employment contract contained a non-solicitation provision, but the agreement did not provide any definition of “solicit,” and there was no reference to social media in the employment contract. BTS brought an action alleging that Bergmann solicited BTS clients in violation of the employment contract. In ruling for Bergmann, the court noted that BTS:
- Had no policies or procedures regarding employee use of social media;
- Did not request or require ex-employees to delete BTS clients or customers from LinkedIn accounts;
- Did not discuss with Bergmann his LinkedIn account in any fashion; and
- Continued to allow its employees to maintain LinkedIn accounts without monitoring or restriction.
Citing the aforementioned Pre-Paid Legal Service and Enhanced Network Solutions Group, the court then found that “absent an explicit provision in an employment contract which governs, restricts or addresses an ex-employee’s use of [LinkedIn], the court would be hard pressed to read the types of restrictions urged here, under these circumstances, into the agreement.”
Social Media Requires Precision Policies and Agreements
These cases provide significant guidance for those broker-dealers seeking to protect trade secrets in the era of social media. As always, precision in company policies and employment agreements is essential.
Broker-dealers should implement clear policies regarding not only the use of social media during the employment but also defining ownership of the social media account. Among provisions to consider:
- Requiring registered representatives to keep client information contained on the social media account secret and preclude the registered representative from disclosing the information to any third party;
- Mandating that registered representatives use the proper privacy options of social media;
- Revising employment agreements to include provisions stating who owns the profile and requiring the deletion of the account at the end of the relationship;
- Requiring the broker-dealer to delete its clients at the end of the relationship or impose obligations or transition the account to the broker-dealer at the end of the relationship.
- Adequately defining solicitation so notifications made over social media constitute a breach of the agreement; and
- Reminding all departing registered representatives of their social media obligations and establishing clear expectations for the representative’s post-employment conduct.
LinkedIn estimates it has more than 332 million users, and Facebook has in excess of 1.19 billion. Social media is a significant resource containing information about a broker-dealer’s clients and prospective clients. Left unfettered, this resource will prove to be a stage for litigation and a battleground for creating the rules governing social media in business.
Chris Pickett and Scott Apking serve the litigation practice group of the St. Louis law firm Greensfelder, Hemker & Gale, P.C. Pickett is co-leader of Greensfelder’s restrictive covenant and trade secret group and the securities and financial services group.