The following scenario is more common—and more troubling—than ever before. A high-ranking employee who has signed an agreement to preserve the confidentiality of business plans, financial information, and trade secrets stealthily collects confidential information belonging to the employer. The employee uses a work laptop to access this type of information on the company computer system. This information may be as simple as a few emails, but it may also be strategic business plans, revenue forecasts, new business targets, personnel files, executive deliberations on promotions, legal advice from counsel, records of transactions on a government contract, discount pricing information, or other trade secrets or privileged information. Employees have in some cases gathered such data to use as proof of schemes to defraud shareholders, customers, or the government, or to prove some other unlawful conduct. Oftentimes, however, the purloined information does not prove what the employee thinks it will prove. Sometimes the employee is a lawyer, which raises serious and sometimes complex attorney-client privilege issues for the company, and ethical issues for the lawyer.

The information often leaves the employer’s premises attached to an email, or on a hard drive, a USB drive, a disk, or in hard copies in the employee’s briefcase or backpack. It may also have been sent electronically to the employee’s legal counsel, a government investigator, and/ or to a cloud account. The information may contain a treasure trove of competitive business information or information reflecting potentially bad conduct—beyond the employee’s initial concerns—that may be of interest to government investigators. Removal of information from an employer’s data systems frequently coincides with either the termination of the employee involved or the employee’s “unavoidable” resignation under circumstances where the employee will later claim constructive discharge. The employee may claim to be a whistleblower, or may simply be leaving the company to join a competitor or pursue other interests, and subsequently decide months later to also act as a whistleblower against the company.

This scenario puts an employer in a difficult situation. In many cases, top management is not sure whether the employee is simply disgruntled or is on to something legitimate. Thus, a telephone call to law enforcement authorities reporting the theft of valuable intellectual property may not be management’s best first move. An internal investigation and initial evidence gathering usually is the preferred first option. In the meantime, the employer’s confidential information may be in the hands of a hostile party or subject to public disclosure, and the employer does not know the parties’ intentions. The employer is exposed to anything from a single-plaintiff whistleblower retaliation claim or other wrongful termination or discrimination lawsuit, to a possible criminal investigation, and/or public release of commercially valuable information that could significantly harm its business.

The purpose of this paper is to describe an employer’s legal rights and options when an employee has removed confidential information without permission.

Click here to read the full Littler Report.