Employee (Data) Theft: What You Need To Know

Every company owns certain information it intends to keep private at all costs. Such information includes but is not limited to business information, client contacts, employee information, financial records, and trade secrets.  How do you protect your assets from employee data theft?

In this digital age when most employees can access company networks, protecting confidential company data has become challenging, if not impossible. Without adequate protection, an employee with ulterior motives can access, record, and transmit sensitive information without getting caught.

Many companies go to considerable lengths to protect their confidential information. Companies may hire security firms, password protect the data, put strong workplace technology use policies in place, and much more; all in the name of protecting their data.

In the past, many of these measures proved to be inadequate in preventing a data breach. Employees who commit data theft can use anything from an external disk drive, an external email account, or even a mobile phone with a decent camera to steal valuable company information.

An employer cannot expect their employees not to bring their mobile phones to work or refrain from opening their private emails in the office. Despite this disadvantage, companies can take some measures to protect confidential information. 

How Can You Prevent Employee Data Theft?

To protect its data, an employer can:

• Insert a confidentiality clause in employment contracts;
• Provide company laptops and mobile phone devices to all employees; 
• Adopt an Acceptable Use Policy (AUP) in the workplace; An AUP dictates how employees should use employer-provided technology and mobile phone devices; and
• Inform the employees they do not have a reasonable expectation of privacy over the data or communications accessed through the company resources.

Bill 88: Working for Workers Act, 2022 (the “Act”) requires employers who wish to engage in electronic monitoring in the workplace to disclose such practices to their employees through a written policy. An employer should ensure their written policy on electronic monitoring promotes transparency and disclosure.

What Can You Do If You Suspect Employee Data Theft?

Even the most robust data protection measures cannot ensure complete protection from data theft. An employer who suspects an employee is stealing the company’s private data should seek legal counsel immediately. 

With their knowledge of employment law and legal processes, an employment lawyer can advise the employer on what to do next and how to hold the thieving employee accountable.

For example, an employment lawyer can help the employer hire a computer forensic investigator to preserve and recover the thieving employee’s hard drive. This enables the employer to trace the employee’s email activity and browser history to discover what was stolen.

If the employee is currently with the company, the employer may start a formal investigation against them. An independent, third-party investigator should be hired to investigate the data theft to ensure the employee cannot challenge the investigation on the grounds of bias. 

The employer should collect and preserve all the relevant evidence, including security footage, documentary records, and witness accounts. Additionally, the thieving employee should be allowed to participate in the investigation and provide their ‘side of the story.”

If, after considering all the evidence, the investigation implicates the employee of theft, then the employer may decide to terminate the employee.

 In addition to firing the employee for theft, the employer may send a cease and desist through an employment lawyer. In a cease and desist letter, the lawyer can demand the employee return the stolen data and destroy any remaining copies. 

If the cease and desist letter does not deter the employee, then the employer may consider filing a civil claim.

What Are Your Legal Remedies Against Employee Data Theft?

 Senior management or executive-level employees have a fiduciary duty toward their employers to act in good faith and in the employer’s best interests. Some low-level or non-managerial employees might also owe a fiduciary duty to the company if they are considered “key” employees.

Since a fiduciary duty requires the employees to act in the best interests of the company, these employees with fiduciary duties cannot engage in self-serving behavior – like using the company’s data for themselves or selling it to business competitors. 

If such a duty is owed, then an employer may sue an employee for breach of their fiduciary duty if they steal the company’s data. Beyond a fiduciary duty, a confidentiality clause in the employment contract may allow the employer to sue a thieving employee for breach of contract.

A claim for breach of fiduciary duty and breach of contract allows an employer to seek:

• Monetary and non-monetary damages;
• Return or destruction of the stolen data; and
• Accounting for any profits the employee made selling the data. 

Additionally, an injunction can help prevent the thieving employee from using confidential information to further their own interests. An injunction is a Court order requiring the other party to perform or avoid certain acts. 

However, any delay in filing an injunction can be fatal to your claim. If the employee has already used or shared the stolen data, your only recourse might be to sue for damages. 

Even in the absence of a confidentiality clause, the employer may have a claim for breach of confidence against the employee. 

Breach of confidence occurs when an employee entrusted with confidential information misuses, abuses and/or discloses it without permission. A breach of confidence claim allows the employer to recover damages for the harm their business suffered due to the breach.

An employment lawyer can help you take legal action against the thieving employee. They can help you determine if the thieving employee had a fiduciary duty towards their employer. An employment lawyer can also help you defend the wrongful dismissal claim if the employee terminated for theft sues for wrongful dismissal.

Conclusion

Data is one of the most valuable assets owned by a company. A business should do everything in its power to protect its data. If you suspect employee data theft, you should move quickly. 

Any delay can be costly for your organization. If the stolen data pertains to other employees or clients, they might sue your business for breach of privacy.

An employment lawyer can help you bring a claim against your employee for stealing company data. They will try to minimize the harm caused by the theft and maximize recovery in the form of damages. 

 Contact Achkar Law

If you are an employer looking to take action regarding employee data theft, our team of experienced employment lawyers at Achkar Law can help.

Contact us today at +1 (800) 771-7882 or email [email protected], and let us help you find the solutions you need to move forward. 

 

 

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