The BlandsLaw blog has a thought-provoking article about LinkedIn which we have reproduced here:
Social media is an emerging and dynamic phenomenon, and consequently social media law is continually being revised. At its intersection with employment law, there are a number of undecided issues including those around non-solicitation, and the use of social media accounts and contacts post-termination. What happens if an employee uses their LinkedIn account to seek business, and sends an ‘invitation’ to all their contacts including their former employer’s clients? A case currently before the NSW Supreme Court is considering this issue1.
LinkedIn has become a well-used resource by recruiters, employers and employees alike. As you are probably aware, LinkedIn is a social media platform that allows users to create a profile and ‘link’ to other contacts also on LinkedIn. Other functions include the ability to post updates, publish and share content, and follow other users. Users may harness LinkedIn to achieve a number of different outcomes ranging from marketing and publicity, through to job seeking or searching for potential job candidates.
The restraint clause
An increasingly common employment contract inclusion is a restraint clause. Typically the restraint clause contains two elements: a non-competition clause and a non-solicitation clause. The general effect of a non-solicitation clause is to prevent an employee from soliciting work from customer or client contacts ‘belonging’ to the employer for a certain period of time, following the date of termination. The technology-led workplace enables many of these work-related contacts to be retained in a multitude of places, including as connections or contacts on LinkedIn.
Employers should consider if their employees currently have restraint clauses in their employment contracts. If the answer is yes, the next step is to review the ‘reach’ of these existing clauses: do they cover ownership of social media accounts and passwords; is consideration given at the outset to which contacts pre-exist the current employment relationship; is the restraint reasonable in the circumstances?
Typically a good restraint clause is ‘cascading’ in nature (eg 1 month; 3 months; 6 months). The reason for this is to allow the courts to have flexibility in amending the clause if necessary, and potentially still have an enforceable provision. (For example if a 6 month restraint is held to be unreasonable then the court may amend this period to 3 months or 1 month depending on the circumstances). Generally speaking the restraint must be reasonable in all the circumstances and only extend as far as necessary to protect legitimate business interests. The considerations here include factors such as the role, salary and the industry.
Lessons for employers
From an employer’s perspective, a restraint clause is an important provision that can mitigate future commercial risks. Practically, however, the restraint needs to cover the likely risks including the use of LinkedIn post-termination and be ‘reasonable’ in its scope and effect. It is hoped that the case currently before the courts will provide some guidance about who ‘owns’ LinkedIn contacts and how the courts view the intersection between non-solicitation clauses and social media. We will keep you posted when the decision is handed down.
For more assistance with this topic, contact Andrew Blands and the BlandsLaw team on 9805 5600. Read more articles here.