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Using Workforce Agreements to Protect Your IP and Prevent Termination Problems

Workforce agreements (WFA) can help protect a company’s intellectual property (IP) and systems during the employment relationship and the contractor engagement. Although use of proprietary information and systems may be addressed as part of a general employment agreement, employing a separate WFA puts employees and applicable contractors on notice of such requirements.

Additionally, by including a termination provision in WFAs, employers can reduce potential liability at termination by specifying breach of the WFA as a fireable offense. Consider implementing a separate WFA with all employees and relevant contractors, with the following principles and guidelines in mind.

Basic principles

At its most basic level, a WFA is a contract. To be enforceable, it must contain the essential elements of a contract: an offer by the employer, acceptance by the employee or contractor, and consideration. Consideration consists of a benefit flowing in both directions (e.g., the employee or contractor provides services and is compensated).

Although all employees should sign the WFA, you may only want contractors who have access to your company’s network or systems or are provided a company email address or issued company equipment, to sign. Other IP provisions (e.g., ownership of work product) may be met via the contractor agreement.

This is not the time for legalese: Use clear, explicit, and detailed language. Ambiguity will be interpreted as favoring the employee or contractor.

Defining what you intend to protect

The WFA should provide a definition of the “company information” you intend to protect. The definition may be tailored to your business but should be broad enough to encompass information related to your company’s past, present, and future:

  • Software, research, developments, processes, techniques, designs, or other technical data;
  • Administrative, financial, marketing, strategic and business plans, or personnel information; and
  • Information provided by third parties on a confidential basis.

The WFA should also define “information systems” that contain the company information and describe permitted uses of such systems, including, without limitation, telephone, server, computer, photocopier, and fax.

Describing permitted uses

The WFA should delineate the permitted and prohibited uses of company information during and after the term of employment or engagement. Affirmative statements clarify actions or standards the employee or contractor is agreeing to (e.g., “I will uphold,” “I will not”). At a minimum, include a statement that the individual agrees to protect the confidentiality, privacy, and security of company information they receive or to which they have access. From there, more specific standards can be described.

To help prevent unauthorized access to company information, assert that such information should only be disclosed to third parties who have a need to know and as necessary to perform the duties of the employee’s position or contractor’s engagement. It is important to clarify that an employee or contractor may not seek personal benefit from any company information or systems available through their work.

For example, the private (e.g., side business) use of information or systems developed for your company by employees or contractors should be explicitly forbidden. (Independently of the WFA, your company should employ formal processes to approve side business). To ensure control of your IP, require the return of all company information, or tangible property containing company information, upon request or termination of employment or engagement.

Describing proper use of information systems that contain company information further establishes expected standards of conduct. Consider restrictions on using or copying company software for personal use; not using unlicensed software on a computer provided by your company; and safeguarding passwords, authentication codes, and more.

Legal terms

Your WFA may be deemed unenforceable if it contains complex legal provisions not easily understood by the typical employee or contractor. Strive to include the following terms as plainly as possible:

Copyright, patent, and trade secret protection

To support the intent of the WFA, at a minimum, include an affirmative statement that your company owns all rights to any work product that results or arises from any task assigned or work performed by the employee or contractor, or that relates to or arises out of your business (“We own it even if you did not work on it”). Including a statement of irrevocable assignment to your company of all such work products helps ensure no ownership exceptions exist.

Moreover, having employees and contractors irrevocably designate and appoint your company as their agent and attorney-in-fact to execute and file any copyright, trademark, or patent application and protect against infringement of the same, alleviates the need to track down a terminated employee for help.

Injunctive relief

As in most contracts involving IP, provide for acknowledgment that restrictions in the WFA are reasonable and necessary to protect the interests of your company. Specify that you may obtain an injunction prohibiting the employee or contractor from continuing to violate the WFA, or a court order compelling them to comply with the WFA. Stating what an injunction entails helps provide the layperson with clarity and helps prevent an argument for ambiguity.

Representations and warrants

If it can be shown that employees and contractors entered into the WFA as the result of undue influence or duress, the WFA likely will be deemed unenforceable. Thus, include representation that the WFA is being entered into freely and voluntarily.

Include a general representation that all terms of the WFA are understood and an agreement that violation of the terms of the WFA may warrant disciplinary action, up to and including termination of employment or engagement. This will help disprove a claim for wrongful termination.

Conclusion

The WFA should be signed before the first day of work, to ensure enforceability based on lack of consideration (the employee or contractor agrees to the terms but receives no additional benefit in return, because they are already employed or engaged). If possible, provide the WFA a week in advance of the start date to allow the employee or contractor time to review it or seek independent advice.

An astutely drafted WFA can help reduce the risk of improper use of your company’s IP and systems and lessen potential termination troubles. Consider these guidelines when implementing a new WFA or revising an existing one.

About the Author

Brian SantoBrian Santo is associate general counsel and compliance manager at the National Committee for Quality Assurance in Washington, DC. He possesses over a decade of in-house counsel, people leadership, and client management experience, including subject matter expertise in complex commercial and government contracting, intellectual property licensing, data privacy, human resource issues, and corporate compliance programs.


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