Impact | Business Risk Management Blog

Decision may have relevance for Illinois employers as well

In a recent and somewhat surprising decision, the Colorado Supreme Court concluded that an employer legally fired an employee for violating the company’s zero-tolerance drug policy, even though the employee’s marijuana use was off-duty and legal under Colorado law.

The decision, Coats v. Dish Network, LLC, 2015 CO 44, was surprising in part because Colorado’s “lawful activities statute” makes it unlawful and discriminatory for an employer to discharge an employee for “lawful” activity outside of the workplace.

Almost daily, we hear about cyber attacks on big businesses and government agencies. But the attacks are not isolated to the big entities. Your business’s most valuable trade secret information more than likely resides in an electronic database that is vulnerable. Yet probably the greatest threat to that database may come from within: your own employees.

A recent Illinois appellate court decision illustrates that a policyholder can compel its insurance carrier to provide it with a defense even when it is clear from extrinsic facts that the insurer will not ultimately have an obligation to indemnify the policyholder against a judgment.

Given the high cost of defending against even baseless claims, compelling the insurer to pay the defense costs even though it will not have to fund a judgment is not an empty victory. As illustrated by the recent appellate decision in Illinois Tool Works, Inc. v. Travelers Casualty and Surety, the policyholder may need to push the insurer to focus on the facts as pled and not the facts as “known” to force its insurance carrier to defend the claim. Policyholders themselves should not focus on the facts as known but on potential liability, assuming the claimant could actually prove the claims — regardless of how factually baseless they may be — in assessing whether it has coverage for defense costs.

The talent market is increasingly fluid, with many businesses following the talent development mantra “if you can’t beat 'em, hire 'em.” Poaching from a competitor is not without risk. However, there are reasonable steps that should be taken to reap the rewards of the fluidity of today’s talent pool while managing the risks. Two principal risks in “poaching” are trade secret misappropriation and interference with a contract. Some employers seek to build on the lessons learned by their competition, and to do so does not inherently violate the law. However, an employer may misappropriate trade secrets by obtaining trade secrets from its new hires.