Steps HR Should Take When An Employee Leaves

Guarding intellectual property should be a focal point of policies prompted by employee departures

Navigating employee departures is one of the more challenging duties human resources (HR) teams face. Success requires addressing a wide range of considerations, from legal compliance to knowledge transfer to minimizing the impact on culture. It’s a task that involves a lot of moving pieces.

One consideration often overlooked when an employee leaves is the protection of intellectual property (IP). When handled correctly, offboarding ensures that IP, such as customer data, source codes, and business plans does not exit the company with departing employees. When missteps occur, companies risk unauthorized use, disclosure, and misappropriation of their IP, all of which can compromise a company’s competitive advantage.

Here are some steps HR teams should take during the offboarding process to ensure IP is secure.

Returning Company IP

In some cases, employees will have actual, physical IP in their possession that needs to be returned to the company before their departure. This can include samples of new products, mockups of designs, or physical documents like business plans, patent applications, or customer lists. Some items, like customer lists, could be on digital devices like laptops or external hard drives.

More often, employees will have digital access to IP through company networks. In those cases, returning IP will involve revoking network access by deactivating passwords and securing access cards.

Reinforcing IP Policies

Reiterating the importance of confidentiality and the legal consequences of IP theft or misuse is an integral part of the exit interview process. HR can provide clear guidelines on what constitutes confidential information and the employee's contractual obligations regarding that information. Exit interviews should also outline the steps employees should take if they need to report conflicts of interest that might evolve in future employment situations.

Enforcing Non-compete Agreements

Non-compete agreements (NCAs) have become controversial in recent years, leading the US Federal Trade Commission in 2024 to issue a rule banning them. However, a recent decision by a federal court in Texas called the ban an overreach by the FTC, leaving the future of NCAs in question.

While companies await the final outcome of the debate over NCAs, they can continue to leverage them as a means of protecting IP in certain situations. The FTC rule, for example, allows companies to apply NCAs to senior executives in a “policy-making position” who are making at least $151,164 per year. Where applicable, NCAs generally prohibit employees who leave a company from taking IP, such as business knowledge or customer relationships, to competitors. Upon departure, companies should remind employees of their obligations under NCAs and inform them of the steps they will take to enforce them.

Monitoring Former Employees

While respecting privacy laws, monitoring the professional activities of former employees to ensure they are not violating NCAs is an important step in protecting IP. HR should adopt an approach that keeps monitoring within legal boundaries and focuses exclusively on protecting IP.

Maintaining open lines of communication with former employees can help tremendously with the monitoring process, providing a means for preventing misunderstandings and potential conflicts. If any issues arise, companies should seek to resolve them amicably whenever possible. However, companies should be prepared to pursue legal recourse to protect IP and enforce their rights when amicable communication breaks down. Exhibiting a willingness to take legal action sends a clear message that the company takes IP protection seriously.

In today’s business landscape, protecting intellectual property should be a central component of every company’s operations. Whether through meticulous contract drafting, robust confidentiality policies, or vigilant oversight during employee transitions, companies prioritizing safeguarding their IP will retain their competitive advantage and establish a culture where integrity and respect for IP are central.

Recommended Resources

What is Employee Offboarding? 6 Best Practices to Get Started, Asana, February 12, 2024.
Offboarding: Definition & Best Practices, Forbes Advisor, April 17, 2024
Offboarding Employees: A 9-Step Process [Free Checklist], Academy to Innovate HR
Best Practices For Structuring An Effective – And Fair – Non-Compete Clause, Forbes, July 27, 2021
Noncompete Clauses in Employment and Commercial Contracts, Bloomberg Law, August 9, 2023

Josh Thompson is the Founder and CEO of Impact Health USA, a telehealth platform.