Employee pirates can plunder a business. Arrrgh ye ready?

Piracy is defined as robbery by ship- or boat-borne attackers upon another ship or a coastal area, with a goal of stealing cargo or other valuables.

During the Golden Age of Piracy, from the 1680s to the 1720s, infamous pirates like Edward “Blackbeard” Teach, “Calico” Jack Rackham, and Captain William Kidd roamed the seas searching for vessels to raid and plunder.

Some pirates even went legit (in a manner of speaking) and became “privateers.” That’s a pirate who was issued a Letter of Marque by their King or Queen and was commissioned to raid the merchant ships of other countries.

By the early 18^th century, most pirates had been captured, killed in battle, or swung from a yard arm. Blimey!

But the lure of plunder is not easily extinguished. Cleaner, better smelling and better dressed pirates still walk among us. Some may even walk your halls.

Employee pirates: A cautionary tale.

According to the universal source of knowledge, Google, employee pirates are individuals who steal or misuse their employers’ intellectual property, trade secrets, customer relationships, or other valuable assets.

A tale of such piracy is told in the allegations of EPI-USE America v. Mark Palma, a lawsuit recently filed in state court in Georgia.      

According to the Complaint, during August and September 2024, EPI-USE’s Vice President Mark Palma, Senior Director James Harmon, and Senior Manager Christopher Haskett orchestrated a mass defection of EPI-USE employees and customers to competitor Labyrinth Solutions, LLC.

The particulars of this orchestrated plundering include allegations that Messrs. Palma, Harmon, and Haskett, while still employed by EPI-USE

• Contacted Labyrinth about meeting to discuss “opportunities and possibilities.” (Pirate code for “we want to jump ship.”)
• Solicited numerous employees of EPI-USE to “defect” to Labyrinth.
• Discussed (via email) the legal recourse a company might have for “poaching or soliciting employees away from their current employer.”
• Sent to their personal email accounts the resumes and personal contact data of 15 current EPI-USE employees.
• Conducted a Teams meeting with those 15 employees for the purpose of discussing their mass defections to Labyrinth.
• Notified clients of EPI-USE of their intention to join Labyrinth and that many other EPI-USE employees would be joining them.
• Solicited EPI-USE clients to follow them to Labyrinth
• Responded to a client inquiry about whether EPI-USE would have the resources needed to support the client, by stating “NO there are no other resources to fill these roles.”
• Provided sample resignation letters, which 11 employees used to end their employment with EPI-USE before jumping ship to Labyrinth.

The three executives are alleged to have done all of this, and more, while working for and getting paid by EPI-USE. That’s some serious chutzpah! (Not a pirate term).

Repelling the pirates

According to the lawsuit, the three executives are alleged to have signed employment contracts with EPI-USE that complied with Georgia law and included provisions

• Prohibiting them from using or disclosing EPI-USE’s confidential information.
• Requiring them to return EPI-USE’s property upon termination of employment.
• Prohibiting them, during their employment and for a period of one year thereafter, from soliciting or attempting to solicit business from EPI-USE clients with whom they had material contact during their employment.
• Prohibiting them, during their employment and for a period of one year thereafter, from recruiting or hiring, or attempting to recruit or hire, any active EPI-USE employees with whom they had material contact during their employment.
• Agreeing that their employment contracts would be construed according to the laws of Georgia.

It will be interesting to see whether EPI-USE is able to capture and punish the pirates who attempted to plunder the company and take its clients and employees as prizes.

Is your ship ready for battle?

The fact that these three “pirates” are alleged to have done these things while still employed by EPI-USE opens them up to a variety of common law claims that are not dependent on the terms of any employment contract.

But not all pirates are as brazen as these three are alleged to have been, and many will avoid engaging in overtly disloyal acts while still employed.

If you needed to do battle with pirates for the treasure that is your business, wouldn’t you want all your cannons loaded and ready for action?

If so, and if you do not have employees sign employment agreements with prohibitions like those described above, you need to think long and hard about changing course.

If your employees do sign employment agreements with such prohibitions, when is the last time you checked to confirm that that they comply with the current law(s) of the state(s) in which you might need enforce them?

Enforcement of restrictive covenants in employment contracts is largely a function of state law; especially since the ban on non-competes by the Federal Trade Commission was blocked by a court and may not be resurrected by the current administration.  

Regardless of whether you employ 15 employees, or 15,000, if the Jolly Roger appears on your horizon it could plunder your business. Are you prepared to take it back?