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Employers with employees operating online accounts on the employer’s behalf will want to retrieve the login information (such as access codes and passwords) for those accounts when the employee parts ways with the company. To increase the likelihood of a seamless surrender of that information, employers should insist that the operators of their online accounts enter into agreements that clarify the employee’s obligation to turn over such information when their employment comes to an end.

A recent decision by a three-judge panel in a Federal Circuit Court of Appeals highlights the importance of including in those agreements language explicitly stating that the employee has a clear obligation to deliver access codes and passwords at the end of the employment period.

The employee at issue in the case was in charge of the employer’s IT function, and has log-in information for the employer’s accounts at PayPal, G Suite and GoDaddy.

A contract between the employer and employee required the employee to deliver to the company “intellectual property and related materials…produced under” the employee’s work for the employer.

The lower court, which granted summary judgment to the employer, and the dissenting Court of Appeals judge were of the opinion that the relevant login information constituted “intellectual property,” but the other two judges on the panel were not convinced. The employee argued that the log-in information lacked independent economic value, was not registered, and is analogous to a birthdate or a Social Security number—possessing characteristics more typical of a form of identification rather than creative thought. The majority on the panel thought those arguments were plausible and that the contract language was therefore ambiguous.

The contract also provided for the employee to turn over a “deliverable undertaken in furtherance of services or material involving confidential information.” The employee already had the log-in information for these accounts before beginning work for the employer. Consequently, she argued, the log-in information was not “undertaken” by the employee “on behalf of the employer,” but instead prior to her employment by the employer.

The majority of the panel also held that the log-in information does not contain or incorporate the employer’s confidential information.

Sending the case back to the district court where a jury would decide the issue at trial, the appellate court held that the lower court’s summary judgment decision was not appropriate because the contract language was ambiguous.

Interstate Medical Licensure Compact Commission v. Bowling, 2024 U.S. App. LEXIS 22093 * | __ F.4th __ | 2024 WL 3998288