The following article appears in the journal JOM, 53 (11) (2001), p. 48. JOM is a publication of The Minerals, Metals & Materials Society

Employee Exit Interviews—An Important But Frequently Overlooked Procedure

When an employee who has technical or management responsibilities leaves an organization, regardless of whether the departure is through termination or voluntary, the potential for legal conflict exists. To the extent to which the departing employee has knowledge of any of the organization’s trade secrets or has been involved in creating inventions, ownership of intellectual property rights could be an important issue, particularly if the employee is planning to work for a competitor. If the employee has signed an agreement containing a covenant not to compete, this also could influence the future relationship between the organization and the departing employee. Further complicating matters is the fact that an employee’s departure sometimes involves unpleasant emotions on the part of the organization, the employee, or both.

A properly created and efficiently administered exit interview program can go a long way toward minimizing legal difficulties resulting from an employee’s departure. First of all, if an employee signed an employment agreement at the time of hiring, or, assuming that proper legal consideration existed so as to make the agreement binding, during the course of employment, the exit interview provides an opportunity to review the obligations under the agreement. This not only minimizes the likelihood of a former employee forgetting about his or her obligations, but also provides an opportunity for the organization and the departing employee to discuss any areas of uncertainty regarding future obligations.

Typically, the organization’s individual responsible for administering the program, such as a human resources employee, would conduct an exit interview. If there was a written employment agreement, during the interview the agreement would be reviewed with the employee in order to make it clear what post-employment obligations would exist. The employee would, as part of the interview, typically sign a document to which the agreement is attached as an exhibit, indicating that he or she was aware of the agreement, understood the obligations thereunder and reaffirmed his or her obligations. To the extent to which there were any issues involving inventions that may have been created by an employee prior to his or her employment with the organization, the exit interview might reaffirm the understanding that the employer had no rights therein. If there were any major trade secrets or projects on which the employee worked, the exit interview might refer to his or her having such information or working on such project. The form might also require the employee to affirm that he or she has disclosed to the employer all developments that might be patentable developed by the employee during the course of employment. If the employer has agreed to waive its rights in any invention and no prior writing documented the waiver, it would be appropriate to insert reference to such a waiver.

A typical employment agreement for technical and management personnel would contain a provision requiring the employee to maintain in confidence all trade secrets received from the organization, trade secrets created by the employee during the course of his or her employment, and trade secrets of third parties received by the organization under an obligation of confidentiality. There would also be a further provision with regard to trade secrets requiring that they not be used except for purposes within the scope of employment and in furtherance thereof.

Employment agreements would also typically state that all inventions and developments made by an employee within the scope of employment would be disclosed to and owned by the organization. The employee would be required to cooperate fully in seeking, obtaining, and maintaining patents for the same, as well as transferring to the organization worldwide title to the invention and patent applications and patents for these inventions.

Some agreements provide a covenant not to compete. This would typically, for a limited time period within a specified geographic area, prevent the employee from being involved with a commercial competitor in subject matter related to his or her prior employment responsibilities with the organization. The agreement might also prohibit solicitation of the organization’s employees.

In the event of a disagreement regarding legal obligations of the employee, the exit interview would provide an opportunity for resolving matters. Failure to conduct an exit interview or failure to discuss such an issue could also result in problems involving the employee’s next employer. For example, while an employee is entitled to take with him or her to the next job enhanced skill and experience obtained while working for the organization, trade secrets cannot be disclosed to a future employer or used for the benefit of a future employer. In the event of unresolved issues, it is not uncommon for a former employer to make a claim or initiate litigation not only against the former employee, but also against the former employee’s new employer, as unauthorized knowledge or use of such trade secrets could violate the rights of the former employer. It is also common for a future employer to contact the organization to clarify what it regards as trade secrets, which might be possessed by the departing employee.

Human memories have their limitations. This can be compounded over a period of time by turnover among employees responsible for administering employee records and by document retention policies of employers. As a result, it is desirable for both the employer and the employee to have copies of all written employment agreements under which the employee performed his or her services, that the exit interview be documented, and that both the employer and employee be provided with copies of the same. Exit interviews serve to refresh recollection and enhance the likelihood of proper post-employment performance. Also, documentation of the exit interview, to the extent that it does not identify trade secrets, may provide guidance to a future employer regarding the employee’s freedom to perform and use certain information, and function in certain areas of responsibility.

While this article has focused on written employment agreements, oral agreements, common law, and state statutes may also impose rights and obligations which need to be considered.

An exit interview can be a valuable tool for both the employer and departing employee, minimizing the likelihood of future legal problems resulting from the employment relationship.

Arnold B. Silverman is chair of the Intellectual Property Department and a member of Eckert Seamans Cherin & Mellott, LLC in Pittsburgh, Pennsylvania.

For more information, contact A.B. Silverman at Eckert Seamans Cherin & Mellott LLC, 600 Grant Street, 44th Floor, Pittsburgh, Pennsylvania 15219; (412) 566-2077; fax (412) 566-6099; e-mail abs@escm.com.