Dance Instructor found not to be a "Key Employee"

I've occasionally discussed restrictive covenants before; what I haven't covered in much detail is the route that employers can occasionally go to prevent unfair competition by former employees who haven't signed restrictive covenants.

At common law, there is a concept of fiduciary duties, which is an obligation on one person to put another's interests ahead of his own.  Professionals often owe their clients fiduciary obligations, and occasionally you get case law where a professional abused information received in confidence to their own advantage.

In the employment context, "key employees" may be considered to be fiduciaries of their employer, and are not permitted to use confidential information they acquired in their employment to unfairly compete with the former employer.  A "key employee" is defined by the following non-exhaustive list:

1. An integral and indispensable component of the management team that is responsible for guiding the business affairs of the employer;
2. Necessarily involved in the decision-making process; and
3. Therefore, has broad access to confidential information that if disclosed would significantly impair the competitive advantages the former employer enjoyed.  

Absent a restrictive covenant or fiduciary obligations, former employees are free to compete with former employers, including bringing to a new business the skills and knowledge acquired while serving the former employer.  But restrictive covenants can limit that (if enforceable, which is not easy), and fiduciary obligations do as well in very similar ways.

In the recent case of Laplante v. Hennessy-Craibe, Laplante operated a dance studio in Cornwall and had employed Hennessy-Craibe as a dance instructor until she left to start her own studio.  It appears that several students went with her.  Laplante then sued and sought an interlocutory injunction preventing Hennessy-Craibe from soliciting current and former students.

This is surprisingly similar to Gatreau v. Arvelo (2004), also involving a defecting dance instructor, in this case from an employer in Brockville.  I suppose Eastern Ontario must have a competitive industry for dance instruction.  Similarly, in that case, the plaintiff alleged that the instructor was a fiduciary, but the judge rejected it.

In Laplante, even without referring to Gatreau, Justice Quigley came to the same conclusion:  He did not see a serious issue to be tried, and felt that even if a trial judge ultimately found Hennessy-Craibe to be a fiduciary, Laplante could be compensated through an award of damages; therefore, he declined to award the  injunction sought.

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There is also previous jurisprudence considering whether or not written restrictive covenants can be enforced against athletic instructors.  Of course, every case is unique on its facts and the specific language of these clauses, but Courts have gone both ways when determining whether or not an athletic school is protecting 'legitimate proprietary interests' with restrictive covenants:

In Gold in the Net Hockey School Inc. v. Netpower Inc., a 2007 Alberta case, the Court found that a non-competition clause did not protect a hockey school's legitimate proprietary interests.

In Moffatt v. Sanchez, a 2004 Ontario decision involving a Tae Kwon Do academy, a non-competition clause was enforced against the former head instructor.

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This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Web 2.0 in the Workplace: Facebook@Work

When is it appropriate for an employee to use Facebook on their computer at work?  Or other personal web resources, such as Twitter, personal email, etc.?

Employers can and should implement policies for appropriate use of computers in the workplace, which can and should provide a clear answer to this.  But which of the following is the best policy?

(A)  Whenever the employee wants?
(B)  Whenever the employee has 'down time'?
(C)  Whenever the employee is on an officially sanctioned break?
(D)  Never, except as may be directly required for the performance of their job duties?

As a common practice, many employers tolerate such usage on the basis of "C" or even "B".  But for a number of reasons, employers should stick with "D".  It's easy for an employee to forget that the computer is not, in most cases, the employee's own property, but it is a tool belonging to the employer which is supplied to the employee to accomplish his or her work goals, so the employer is technically within its rights to insist that it only be used for work purposes, and in fact there are problems that can arise from not doing so.

One might ignore the legal issues which could hypothetically arise from too much informal generousity to employees - CRA attention to non-cash benefits or employee claims that a perk constituted a part of their compensation package - because these are likely to be quite trivial in this context, but it is harder to ignore the potential threat to IT security posed by too much casual computer use.  The technical aspects aren't my expertise - talk to your IT professional about this - but while my understanding is that facebook and hotmail themselves are reasonably benign, they can easily link to websites which are more malicious.  Careless use - or use by people who aren't web-savvy - of these resources can easily lead to computer viruses or other malware that could compromise your security and the privacy of your network.

Not only are your files proprietary, but as most computer networks have some client information on them, they aren't all yours to share.  If your network is compromised and your clients' personal information is hacked, you may be liable in the event that you have not taken all reasonable precautions to prevent this.  If it turns out that the security breach was a consequence of your receptionist, with your blessing, surfing facebook and inadvertently clicking a malicious link, then that's a problem for you.  Not only are you potentially liable to third parties, but employee discipline in such a context would be inappropriate:  If you have communicated to employees - expressly or impliedly - that it is acceptable to be surfing the net in such a manner on work computers, then you can hardly blame them for having done so.

Here's the other catch:  Having a good policy isn't enough.  You need to actually enforce the policy.  If it comes to your attention that a certain employee or group of employees isn't adhering to the policy, then you need to implement a program of progressive discipline.  It's all well and good to say "Our policy prohibits this", but if managers turn a blind eye to such conduct, the employer can be said to have "condoned" the conduct nonetheless.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.