Wednesday, 4 July 2012

Social Media and the Rule against Solicitation

As someone who both practices employment law and blogs, tweets, whatever verb Facebook becomes, a question that is often put to me by persons contemplating moving to a new employer is whether that person is entitled to change the name of his or her employer on various social media sites.

The answer is more complicated than it would first appear; and, I would submit, also remains unanswered by Ontario courts. Nonetheless, below one will find the musings of this passive observer.

Let us start with LinkedIn. Personally, I love LinkedIn. It has proven to be the most powerful of the social media sites for driving people to my blog and for generating real, money-paying, clients. What is interesting about LinkedIn is that when one changes the name of his employer, LinkedIn goes out of its way to highlight this change. On the mobile version of LinkedIn the site goes so far as to move the story to the top of my feed and suggest that I offer congratulations.

Facebook will add the change to a user’s “timeline” or whatever it is that Facebook is using these days so that some attention will be called to the change. Twitter would draw no attention to the change in one’s biographical information.

Where LinkedIn’s approach, i.e. “say congratulations!” creates problems is with respect to the issue of departing employees who leave their employer to compete against their former employer.

The Issue

If an employee resigns from his employer with the intention of creating (or working for) a competing enterprise is he entitled to change the name of his employer on LinkedIn: 

(a) at all, 
(b) to the name of the new employer, and 
(c) if the answers to (a) and (b) are yes, when is the employer permitted to do so?

The reason that this question is an issue is the departing employee’s duty to not to solicit work away from his former employer. A lot of employees, especially those employed in industries were fidelity is loose and competition fierce (which for this Ottawa-based practitioner means high tech,) are subject to non-competition and non-solicitation causes in their employment agreements. Although beyond the scope of this particular post, not all of those agreements are necessarily binding; but, for the purposes of this conversation, let us presume that an employee either has a binding agreement or is subject to a fiduciary duty not to solicit work from his employer.  [NB: Whether an agreement is enforceable or whether one is a “fiduciary” of an organization is a decision that should only be taken on legal advice and a solid understanding of the material facts of one’s actual situation.]

Reframing the question, then: does changing the name of one’s employer on LinkedIn violate an employee’s duty not to solicit work from clients of one's former employer?

My answer is "no."  I premise this answer on the decision taken by the Ontario Superior Court of Justice in Aquafor v. Whyte, Dainty and Calder, 2010 ONSC 2733 (CanLII).

While I appreciate that Aquafor is by no means the final word on fiduciary duty or non-solicitation, it does provide guidance on what is and is not acceptable marketing behaviour.

Facts in Aquafor

For the sake of completeness, the facts in Aquafor were as follows, two professional engineers Robert Whyte and Bill Dainty worked at Aquafor, a niche market engineering firm, from the early 1990s until 2003. They were senior engineers with primary responsibility for the firm’s mining and land development clients, and accounted for approximately 25% of Aquafor’s gross revenues.

In the fall of 2003, Mr. Whyte and Mr. Dainty left Aquafor and established their own engineering firm, Calder.  They were not bound by any non-competition agreements.

Aquafor sued Whyte, Dainty and Calder for millions of dollars claiming much bad behaviour including wrongful resignation, an issue better canvassed in GasTOPS and summarized in an earlier blog post

At trial the defendants, Whyte and Dainty, took the position that they did not solicit clients of Aquafor and that, as professionals, they were entitled to accept work from clients who chose to follow them to Calder.

Reasons for Decision

In her reasons for decision the Honourable Justice Barbara Conway held that, given their positions within the company Whyte and Dainty were fiduciaries of the company. (An important finding given the assumption made in this post.)

In answering the question about solicitation, Justice Conway prefaced her comments with the oft-repeated statement of law in this area that:

The law is clear that while a fiduciary is not precluded from competing with his employer after he leaves, he must not do so unfairly. Soliciting clients is considered unfair as it prevents the employer from solidifying its relationships with those clients or otherwise dealing with the fiduciary’s departure.  A fiduciary will therefore be restricted from soliciting the employer’s clients for a reasonable time after departure. (Para. 47.) [Citations omitted.]

In finding that Whyte and Dainty did not violate their fiduciary duty to Aquafor, Justice Conway made the following powerful observations:

The defendants told four clients that they were leaving.  Given that they were working closely with those clients at that time and in the context of their professional relationships, I do not view that communication as a breach of their fiduciary duty without additional evidence that they asked the clients to come with them or tried to persuade them to leave Aquafor.  (Para. 56.) [Emphasis added.]
Calder’s letter of introduction is not a solicitation.  The letter itself was general and it was sent out generally to Caledon businesses and mining companies in Northern Ontario from a Government of Canada listing.  The fact that three of Aquafor’s clients happened to be on that list does not elevate it to the level of soliciting. (Para. 59.) [Emphasis added.]

In the end Justice Conway found that the defendant employees had not, in any way, violated their duty to their former employer with respect to the solicitation issue.


Returning then to the issue of LinkedIn, my perspective is that changing one’s employer on LinkedIn is no different than a “letter of introduction” or a notice in a local newspaper or trade journal. Provided that the dissemination of the information is wide and that the information does not include a request for former clients to follow the departing employee, then nothing is wrongful in making the change in and of itself.

A question not answered directly by Aquafor, however, is when an employee may make such a change on LinkedIn. The problem with the internet is that it is immediate. As soon as I “publish” this blog post it will be sent by RSS feed to a number of sites along with, one hopes, subscribers. Google will crawl over it before I have a chance to edit out the typographical errors. The point is that the internet is not a trade journal or direct mailing; it is immediate. Timing therefore is more crucial a factor than ever.

My position on the timing issue is that one cannot change the name of his employer until the end of the reasonable resignation period. If a departing employee provides notice of resignation specifying a date upon which his notice will become effective and the employee lists his former employer on LinkedIn, then the employee would be prudent to leave everything in place until at least the date the resignation becomes effective. The failure to do so may violate the duty to resign on reasonable notice, the duty against solicitation, or both.

Were one to wish to be truly ‘clean,’ then my recommendation would be to change the name of one’s employer on LinkedIn away from OldCo, but leaving the name blank. If former OldCo clients then contact the departing employee to inquire where the departing employee went, or what happened, then it is the client who initiates the contact and not the departing employee and no argument could be made that the employee in any way attempted to lure the client away from OldCo because there is no information at all posted.

Of course a lot of these issues remain to be resolved with the court. One can only hope that counsel arguing the case (or even better the judge(s) hearing the case) have a solid understanding of the inner workings of the “series of tubes” that is the internet.

In the alternative, a lot of these issues could be avoided if astute employers (and their counsel) drafted agreements that spoke to these issues before they came up.

Therefore, I ask the question: are people seeing such agreements or provisions in their employment agreements? Do others think that they will be workable?

Time will tell one guesses.

As always, everyone’s situation is different.  The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. 

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