Business Viewpoint: Ken Short on state’s new employee-raiding law
By KEN SHORT Tulsa World, Business Viewpoint | Posted: Thursday, July 17, 2014
The past few years have seen a rise in lawsuits between business competitors over the hiring of each other’s employees. Furthermore, employee raiding and trade secret theft often go hand-in-hand.
Google was recently sued by PayPal over the alleged theft of PayPal’s employees and trade secrets as Google makes a push to enter the mobile payment system market. Similarly, Aon Corp. and Alliant Insurance Services, two of the country’s largest insurance brokers, are engaged in a lawsuit over the alleged raiding of 75 Aon employees by Alliant in February.
However, employee raiding and trade secret theft is not limited to large, national companies. Oklahoma courts have certainly seen a rise in these lawsuits, as well.
With ever-increasing competition, Oklahoma employers, large and small, are rightfully concerned about the prevention of unfair competition from former employees, including the misappropriation of their trade secrets, the poaching of their customers and the raiding of their employees.
Many businesses have been dismayed to learn that the noncompete and nonsolicitation agreements signed by their former employees may be unenforceable under Oklahoma law.
Oklahoma is still one of only a handful of states that prohibits noncompete agreements (except in limited circumstances), but the Legislature recently enacted a law permitting Oklahoma businesses to lawfully prohibit the raiding of their employees and independent contractors by former employees.
The statute was enacted in response to the Oklahoma Supreme Court’s decision in Howard v. Nitro-Lift Technologies LLC, which struck down an employee-raiding provision as a restraint of trade because it could be perceived to prohibit the hiring of a business’s former employees who sought out other employment on their own initiative rather than by solicitation.
Oklahoma’s new employee-raiding law states: “A contract or contractual provision which prohibits an employee or independent contractor of a person or business from soliciting, directly or indirectly, actively or inactively, the employees or independent contractors of that person or business to become employees or independent contractors of another person or business shall not be construed as a restraint from exercising a lawful profession, trade or business of any kind.”
The law allows Oklahoma employers to enter into a contract with their employees that broadly prohibits their former employees from either directly or indirectly or actively or inactively seeking to hire their employees and independent contractors. The law does not prohibit the hiring or employment of employees or independent contractors who were not actually solicited.
The law, unfortunately, does not specifically define the phrases “directly or indirectly” or “actively or inactively.” Neither does it define the term “independent contractors.” However, by including “indirectly” and “inactively,” it is likely that the Legislature intended the law to be applied broadly. In today’s world, that may mean that an online job posting constitutes “indirect” solicitation. It’s certainly likely that phone calls and emails to employees constitute “direct” solicitation.
Oklahoma courts will soon determine what types of conduct by former employees rise to the level of unlawful solicitation.
Lawsuits over employee raiding are expensive, time-consuming and distracting. However, Oklahoma’s new law clearly provides employers with added protection.
In order to fully protect their interests, it’s vital that businesses ensure that their noncompete agreements comply with Oklahoma law and take advantage of the recent enactment permitting them to prohibit the solicitation of their employees and independent contractors.
Reprinted with permission. Copyright 2014 by Tulsa World.
Ken Short is an associate with the law firm of Doerner, Saunders, Daniel & Anderson. He represents local, regional and national employers in many areas, including employment, manufacturing, energy, construction and general litigation. The views expressed here are those of the author and not necessarily the Tulsa World.