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Protecting your trade secrets from departing employees

May 11, 2021 | Employment litigation

The value of trade secrets comes from the fact that they are not publicly known. To keep this information secure, companies need to take specific actions to protect it. Failure to take these steps can leave sensitive data vulnerable to loss or theft.

For instance, if an employee is leaving a company, California employers would be wise to take the following steps to protect trade secrets and avoid a legal dispute.

While the employee works for you

As an employer wishing to protect your business’s trade secrets, your work begins well before an employee leaves. Upon hiring a new employee who will likely have access to proprietary information, you might consider having them sign a non-disclosure or confidentiality agreement.

Other measures to protect trade secrets include:

  • Keeping material in locked cabinets or password-protected programs
  • Restricting employees from taking physical files home with them
  • Informing the employee of expectations regarding trade secrets
  • Requiring employees to complete training on protecting confidential information
  • Properly labeling and identifying private data as such

Employers can take these steps upon hiring an employee or throughout their employment to ensure employees do not unlawfully access or use trade secrets.

When the employee leaves

When an employee notifies you that they are leaving, or when you are preparing to terminate them, you can take additional steps to safeguard proprietary information. When an employee is departing, employers can:

  • Collect company equipment from the employee
  • Change access passwords
  • Hold an exit interview and remind the employee of any agreements addressing protected material

It can also be crucial for employers to take swift action if they learn that an employee has already taken or misused trade secrets. These actions can range from enforcing the terms of a contract to seeking an injunction and pursuing damages.

Trade secrets can hold significant value and give a business a competitive edge, whether they involve a proprietary formula or novel marketing approach. Protecting this valuable information from employee loss or theft can be crucial in ensuring it does not get lost, stolen or misused.