The protection of property, be it patient records, financial information, consumer data, merchandise, or intellectual property, is a serious issue for North Carolina companies of all sizes. A few years ago, there was much debate and publicity around a bill referred to as the "ag gag" bill*. Despite a veto from then Governor McCrory, the bill became law without much fan fare. The constitutionality of the statute is now being challenged but the law remains available for employers to use.
In case you missed it, let's review the North Carolina Property Protection Act (NCGS 99A-2). Beginning on January 1, 2016, under statute North Carolina employers got the right to recover monetary damages resulting from employees’ unauthorized access to and theft of their property, for example from employees who expose trade secrets or take pictures of their workplaces. The law allows an employer to sue an employee or other person “who intentionally gains access to the nonpublic areas of another's premises and engages in an act that exceeds the person's authority to enter those areas.” Under this law, an "act that exceeds a person's authority" to enter the nonpublic areas of another's premises is any of the following:
- An employee who enters the nonpublic areas of an employer's premises for a reason other than a bona fide intent of seeking or holding employment or doing business with the employer and thereafter without authorization captures or removes the employer's data, paper, records, or any other documents and uses the information to breach the person's duty of loyalty to the employer.
- An employee who intentionally enters the nonpublic areas of an employer's premises for a reason other than a bona fide intent of seeking or holding employment or doing business with the employer and thereafter without authorization records images or sound occurring within an employer's premises and uses the recording to breach the person's duty of loyalty to the employer.
- Knowingly or intentionally placing on the employer's premises an unattended camera or electronic surveillance device and using that device to record images or data.
- Conspiring in organized retail theft, as defined in Article 16A of Chapter 14 of the General Statutes.
- An act that substantially interferes with the ownership or possession of real property.
Significantly, the Act also makes parties who intentionally direct, assist, compensate, or induce others to violate the Act jointly liable. Businesses likely will be able to bring employment-related litigation, such as non-compete cases in which a former employee is suspected of taking valuable trade secrets, under the Act. The joint liability provisions in the Act makes it even more important that employers exercise due diligence when hiring new employees, particularly those who may have worked for a competitor. Employers should also be cautious of doing anything that could be construed to induce incoming employees to take property belonging to their former employer upon leaving.
A court may award the following remedies: (1) Equitable relief. (2) Compensatory damages as otherwise allowed by State or federal law. (3) Costs and fees, including reasonable attorneys' fees. (4) Exemplary damages as otherwise allowed by State or federal law in the amount of five thousand dollars ($5,000) for each day, or portion thereof.
Keep this law in mind the next time you are struggling with a potential employee theft issue. If you have a potential employment related issue that might fall under this law, call attorney Jenny Sweet for assistance. Jenny advises CAI members under our new Prepaid Legal Services Plan. Members receive unlimited employment law advice under this plan!
*Ag-gag. Opponents of the original bill, including animal rights activists, claimed the bill prevents that have exposed incidences of animal cruelty occurring in the agri-business (hence, "ag gag" bill). Other critics of the law, including former Governor McCrory, feared it would not protect employees who report illegal activities, discouraging employees from “whistle blowing.” The final law does include such protections.