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Thursday, April 30, 2009

Handling ex-employees’ data

In this morning’s Wall Street Journal, Joseph De Avila features me in an article on how companies handle a laid-off employee’s digital belongings. Mr. Avila’s article got me thinking about an interesting related issue. A business can buy a new computer for a thousand dollars. However, according to a recent five-month study commissioned by Intel, that same computer costs an average of $50,000 to replace. That Intel study found that 80% of the value inherent in a lost or stolen computer is attributed to the sensitive, confidential, and proprietary information stored on that computer.

The Business of Management reports on the the following findings from this Intel study:

  • The individual losses varied from $1,213 to an astounding $975,527.

  • The cost of recovery is directly related to how quickly the company learns of the loss. If the company discovers the loss the same day, the average cost is only $8,950. That average cost rises more than ten-fold, to $115,849, in the matter of just a week. 

These findings become even more important as more employees face the unemployment line through lay-offs and other job losses.

Because of the exponential increase in costs associated with even a week’s delay in recovering an ex-employee’s computer, it is incumbent upon employers to secure employees’ computers and data before they walk out the door. Some proactive steps for companies to take include:

  1. Distributing to employees comprehensive electronic communication policies that cover all types of technology in use at the company (computers, voice mail, email, mobile devices, social networking, internet use, instant messaging, etc.). The policy is critical to establish employees’ expectation about proper uses for technology, and also what belongs to the employee and what belongs to the employer.

  2. Once an employee leaves employment, voluntarily or involuntarily, immediately shut-off their network access and secure the return of all company-owned technology, files, and data.

  3. Consider what information of the former employee is worth keeping and what can be destroyed. For example, in professions where communications with clients are important (like law, sales, or finance), companies might keep emails and contact data.

  4. Lastly, to quote myself from Mr. Avila’s article: “If they think an employee has stolen anything, they will look for that…Companies fearing lawsuits from disgruntled former employees may have their IT department or an outside firm search through the emails, too.”

I generally do not preach draconian employment policies. A business, however, cannot be too careful with securing its data and information. Leniency and lax policies can result in the loss of information and data that can prove very costly to recover.

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For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or