Who gets what in a break-up? I’ve addressed the employment break-up and the metaphorical marriage contract in my corporate divorce series, but what about the distribution of property when employment ends?

Who Owns What

Unlike the marital relationship, which hypothetically balances power between spouses, the employment relationship is founded on the central concept of control: it is the employer who dictates the time, place and manner of how a person does his or her job. And toward that end, it is the employer who gives the employee the tools to do that job. When an employee builds something with those tools (literally or figuratively) at the employer’s direction and on the employer’s dime, then it is the employer, not the employee, who owns the resulting product. Once you accept this central tenet of the employment relationship, it is actually pretty easy to answer the question of who owns what when the parties split up – with few exceptions, the employer, not the employee, gets to keep the employment assets (the desk, the books, and yes, even the red stapler).

Splitting Up Intangible Things

But what about intangible things? It is easy to point to something an employee builds or makes and make an ownership decision about that particular thing. But non-things are a bit harder to characterize as his or hers. I wrote about “knowledge ownership” previously and concluded that an employee’s skills, thoughts and knowledge about how to do the employee’s job are not “things” that can be “owned.” The problem arises, however, when that knowledge is reduced to something that, while perhaps intangible, is in fact portable.

I mean data, of course, and not the big kind. It is the little kind of data that seems to be most problematic for employers and employees – the contacts stored on the employer’s computer system, the exemplars of work the employee has built up over time, the notes, conceptualizations – all of it nicely stored on a distant server. I won’t divert into BYOD (bring your own device) territory but it is important to note the challenges that arise when technology so effortlessly mixes personal and business affairs.

Some Guidelines for Splitting up the Assets

So given the difficulties inherent in splitting up intangible things, and the potential for trouble when disagreements arise, here are some thoughts:

  • For the employee: leave naked. If you worry about leaving behind information that is critical to you – such as digital photographs of your kids, last year’s tax returns and your dentist’s cell phone number, by all means make a practice of keeping that information stored on your personal cloud or peripheral. While asking an employer to supply this information after you leave is perfectly reasonable, you can’t control the response (and more importantly, the timing of that response given you are no longer mission critical), so keeping your own copies makes sense, especially in the case of an unexpected termination.
  • The flip side? If you have stuff belonging to your employer, send it back. By stuff I don’t mean your paystubs, copies of benefit plans, and other compensation and benefit-like things that you really ought to retain, at least as far as the IRS is concerned. Rather, by “stuff” I mean customer files, your employer’s laptop, and other things you may have inadvertently hoarded over the course of your employment.
  • For the employer: be reasonable. While it is true you aren’t in the business of locating and downloading your former employees’ tax returns, some sort of reasonable effort might be in order to search for things stored on your cloud – particularly if that former employee may someday be your customer and not your competitor.
  • For both employers and employees: get yourselves organized. In too many circumstances, disputes center around silly things – claims that information and property haven’t been returned when those items are discovered sitting on a desk in a warehouse (after thousands of dollars of legal fees arguing over whether those items were misappropriated) can be easily avoided by keeping receipts showing delivery, and detailed logs of items that have been returned.

An Imperfect Metaphor

The corporate divorce metaphor really doesn’t apply to the concept of property distribution on termination. For the most part, employers own everything employment-related and frankly have no legal (versus moral) obligation to give back any data or other intangible “personal items” the employee may have stored over the course of employment. With that said, and as I’ve said before, some advance planning might be in order to avoid an unnecessary and expensive trip to court.