Preventing Employees from Taking Valuable Company Information

In many cases, a company’s most valuable asset is its intellectual property, that is, items such as its customer list, its trade secrets, its marketing strategy, and so on. With any of the above information, a competitor could gain an unfair advantage.

The non-disclosure provision of an employment agreement or a stand-alone non-disclosure agreement (also known as an “NDA”) may be an employer’s most critical means of protection against employees who have access to confidential or proprietary company information. In the agreement, the employee agrees not to take, use or disclose to any third party any of the employer’s confidential information or be subject to penalties for a breach of such agreement.

To minimize future disputes, the parties should clearly specify exactly what information is considered “confidential and/or proprietary” and what means will be used to protect such information both during the term of employment and after.

Some people prefer a stand-alone NDA so that other sensitive terms of the employment agreement (e.g., salary) are not disclosed to the public during litigation which may later occur.

It is best that the employee be required to sign the chosen document(s) prior to the start of employment. If that did not occur, it is still a good practice to get the document signed as soon as possible although some additional steps may be needed when the person has already begun his/her employment.

A non-compete provision or agreement may also be useful to help further limit the future employability of such employees for a reasonable time (which may influence his/her decision to leave in the first place). The enforceability of non-compete agreements varies from state to state so care should be taken when these documents are prepared.

An audit of the company’s records to ensure that each employee has signed the appropriate documents may be a valuable exercise to plug any undiscovered weak links in the company’s protection of its assets.

If you have any questions or need help implementing a plan to protect your company’s information, please contact me and I will be glad to assist you.

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