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August 2011
Understand Confidentiality
By Gary Smith

Understand Confidentiality

     Almost every business has confidential proprietary information. The information can include customer lists, credit information, financial information, pricing policies, internal manuals or “the secret formula.” Confidential information has economic value to your business because it is confidential, and your business could suffer if someone took that information and used it or disclosed it.

     In most businesses, the owner cannot protect this information by simply not telling anyone else. Your employees will have to know enough of the information to be able to do their jobs well. It is up to you to maintain the necessary protections on the information you share with employees.

     First, when dealing with information that you want to keep confidential, you must keep it confidential! You cannot leave the information lying around for all to see, even if it is just lying around your office. If you allow open access to information to all of your employees, whether they need to know the information or not, or if you are not careful to keep information from being accessible to all of your employees, you may lose the ability to claim the information is confidential.

     Second, have confidentiality policies and agreements that your employees acknowledge and sign. Maintain active policies and procedures for handling confidential information so that only those people who need to know the information actually know it. These procedures include how the information is stored and shared with others.

     If you do not take adequate precautions when handling your confidential information, you may not be able to stop that ex-employee who discloses it. Also, it might be published in a British tabloid.



Jailed, Unemployed and PAID!

     The North Carolina Court of Appeals recently upheld a ruling where a former employee was entitled to unemployment benefits even though the employment was terminated because the employee was in jail for four months.

     In this case, the employee worked at a fast food restaurant. When the employee was released from jail after a four-month incarceration, his employer said he no longer had a job. The employee then filed an unemployment claim.

     The employer contested the claim on the grounds that the employee had “left town,” and the Employment Security Commission (ESC) investigator agreed with the employer. The investigator found the employee left his employment without good cause attributable to the employer.

     The employee appealed. The employer did not participate in the appeal hearing conducted by telephone. The appeals referee rejected the employee’s claim, but for a different reason than the employee leaving without good cause. The appeals referee found the employment was terminated as a result of the employee being in jail and classified that as misconduct related to work.

     The employee then appealed to the full ESC. The full ESC and every court through the Court of Appeals reversed the decision of the appeals referee. The employee got unemployment benefits.

     Why? In short, because the employer didn’t show up for the appeal.

     The case changed from the employee leaving work without good cause to the employee being fired for cause as a result of the appeals referee’s findings. The employer did not present any evidence at the appeal that supported a termination for cause because the employer wasn’t there.

     In addition to emphasizing the need for employers to participate in all steps of the ESC process, the Court of Appeals also showed that simply being in jail does not, by itself, show that you have “cause” to terminate employment. You must be able to show that the incarceration in fact violates your workplace conduct rules. The burden is on the employer to show why the employee should not get benefits. Make sure you can.



Retaliation Can Be Timeless

     Imagine you have an employee who does not like your response to his complaints and quits his job with you. Two years later, this same person applies for a job with you, and you don’t hire him. Was your decision to not rehire him retaliation against him? According to the Fourth Circuit Court of Appeals, it could be.

     An employee of First Tennessee Bank quit her job after she complained of sexual harassment and did not believe that management in the bank properly handled her complaint to remedy the harassment and prevent future harassment/retaliation. Two years later, she applied for a job with the bank. She was not rehired because she had “issues with management.”

     The Court of Appeals decided that, even though two years had passed, the bank’s decision could qualify as retaliation. It was the first time the bank had to retaliate against her since she quit her job two years prior. (It is important to note that this decision only meant that the former employee could continue with her lawsuit; it did not mean she would win once all of the facts were known.)

     As a result of this case, you should review your policies about rehiring former employees. The number of claims being brought by former employees who are not rehired is increasing.


Gary Smith is an attorney at Wishart, Norris, Henninger, P.A.
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