Just yesterday, in our L10 meeting, my colleague Kate Dadetto stated “In reality, I don’t think there’s that many HR emergencies.” I often remind the team at Red Clover that we aren’t brain surgeons. What we do is important, but it isn’t the most important thing in the world. We don’t necessarily describe our job as exciting. I love what I do, but it’s rare I grab drinks with friends and talk about my thrilling day in the world of HR consulting. So why was the team talking about our industry like we were embroiled in an old-school spy thriller?
What were we talking about?
Although it may not necessarily be the topic of water cooler chatter in most workplaces, there is legal drama brewing between HR software providers Rippling and Deel. Rippling is accusing Deel of planting a spy, Rippling having hired the purported spy in 2023. This person allegedly used their unfettered access to Rippling business data, trade secrets, customer information, and sales process and then shared it back with Deel. This was all in light of Rippling choosing not to renew its software contract with Deel. In turn, Deel is alleging that this is merely a distraction technique by Rippling, having recently been accused of violating Russian law sanctions and beginning a competitive anti-Deel messaging campaign. The PEO/HR software start up ecosystem is incredibly competitive, but I never would have predicted corporate espionage! Apparently, this all came to a head when the “spy” was confronted by an external solicitor working on behalf of Rippling, and the individual locked themselves in a bathroom stall in order to delete any incriminating evidence.
I’ve encountered a lot of unique employee situations both in my career in Higher Education and in HR, but never did I have to confront someone in the bathroom for potentially funneling trade secrets to a competitor.
What can companies and HR learn from this situation?
1. Due diligence is critical
When deciding on a PEO (Professional Employer Organization) or SaaS (Software as a Service) solution to help support your HR function, it’s important you do your research. Outside of the initial sales call and a demo, sometimes a simple Google or LinkedIn search can provide you some more information about your potential HR software partner – things that a sales person won’t ever tell you. We were recently supporting a client through PEO due diligence, and the CFO did a quick search on LinkedIn and found a number of complaints from business owners about one of the contenders. The CFO made it clear he had zero interest in working with them given the volume of complaints on the professional social media network. Right now, if any of our clients did a Google search on Deel or Rippling, this is what would come up. It’s bad business for both sides, and it is a great example about how businesses should use all research resources available to them when deciding on partners and solutions.
2. Implement a thorough, data-driven recruitment processes
The HR tech ecosystem is small, so it isn’t surprising to see individuals who’ve cultivated a career in the space move among competitors in the industry. And generally, I assume the best about candidates, because a recruiting process that assumes the worst about job seekers is one that is set up for failure – and it’s not how we approach our recruitment process outsourcing projects with our clients. I don’t necessarily know if there are any questions you can ask someone to make sure they aren’t a spy, but you can use behavioral interviewing to dig deep into a person’s career history and experience, under the guiding principle that the best predictor of future performance is past behavior. I also wonder about how Rippling completed reference checks in reference to this candidate – and could they have taken steps to learn more about this individual, their work history, and confirm if the information in the resume was true. A lot of this is speculation, but we know businesses often cut corners in their recruiting process in order to hire quickly, especially if it means plucking top talent from a competitor. Hiring can be done quickly, but shouldn’t be rushed – and when businesses avoid or skip steps in the process, it’s possible they make a a bad hire, sometimes with disastrous results.
3. Tighten up those restrictive covenants
Although the lawsuit alleges the individual was working on behalf of Deel to gain trade secrets from Rippling, my assumption is that the individual still would’ve been required to sign at least a non-disclosure and confidentiality agreement. Doesn’t their actions immediately imply that those documents were explicitly violated? It’s important you review your restrictive covenants with employment counsel to ensure they are written in a way to best protect your company’s trade secrets and proprietary data. One could argue that non-competes would most likely help companies avoid a situation like this, but in some states, non-competes are illegal, and the federal law banning non-competes is still in flux with ongoing legal battles. Non-solicitation agreements are still legal though, so this is one way that employers can ensure that former employees are dissuaded from taking actions that impact your business by poaching clients or other employees.
4. Check your ethics
What really blows my mind about this whole situation is the ethics and what companies and individuals are willing to do to gain the competitive edge in the HR space. If in fact Deel did plant one of their people into Rippling, it calls into question the ethics of leadership and the individual who agreed to do it. It’s important for companies to act in ways that are aligned with their company culture and core values. Especially if there is a greater chance for those behaviors to be put under a microscope when they unexpectedly make business headlines. Even if these were the actions of a select few, this type of bad press can easily tank your reputation and your employer brand. In a company’s desire to make money, they should never act in a way that will adversely impact their employees ability to be proud of their work and where they work. It’s never a great feeling to have a story about alleged illegal activity be the first story when you search for your employer. It also seems like conflict between the two providers is now being played out publicly, and it’s going to affect every person in the respective organizations, even though they weren’t involved. Internally, both companies in this situation have a lot of damage control to do.
Where do we go from here?
It will be interesting to see how this story develops. It’s also not lost on me that HR software sales season is heating up, as all these tech companies are trying to build out their implementation schedules for Q3 and Q4 for 2026 launch. HR has a responsibility to build processes that protect the ethical reputation of their company, especially to avoid headlines like these. It’s also about maintaining a positive internal reputation, where employees are only asked to do things that are ethical and value-aligned. And is your industry reputation really worth it just so you can post a slightly bigger market share than your competitors?
