Significant ways of protecting trade secrets due to departing employees

On Behalf of | Sep 8, 2021 | Trade Secrets |

Trade secrets are the lifeblood of many companies, and they include confidential information like procedures, processes, methods, formulas, business plans and internal marketing data. It is vital to protect this crucial information from competitors for sustainability in a highly competitive business environment. One of the ways your competitors can get access to your company’s trade secrets is by hiring your key employees who are aware of the company’s confidential information.  

In California, non-compete agreements for employees are generally not enforceable, and this has been a challenge for employers when protecting trade secrets from departing employees. However, proper planning and strategic thinking can significantly help employers protect their trade secrets from departing employees. Read on to learn more about saving a company’s confidential information from loss through departing workers.

Setting the groundwork for protection at the beginning of an employment

Safeguarding of trade secrets begins with an employment relationship. In ways, it is like entering into confidentiality and non-disclosure agreements. Though they are not enforceable, these agreements can be one vital element of a trade secret claim under California’s Uniform Trade Secrets Act (UTSA). The agreements indicate that the company took practical steps to identify their trade secrets and set up measures to maintain their confidentiality.

During employment, employers should provide employees with regular training on the available confidentiality policies and the importance of observing them. The company must also take proper precautions to ensure that trade secrets are protected by limiting their access to only a few trusted employees.  

Conduct a comprehensive exit interview

How an employer responds to an employee’s resignation is imperative in determining whether trade secrets will be at risk. When conducting an exit interview, ensure you have the employee’s file containing all the confidentiality agreements and the restrictive covenants they signed.

While conducting the interview, it is essential to maintain an even tone. The purpose of the interview should be to remind the departing staff of their confidentiality obligations and acquire a continued agreement to honor them. You can also draft a list of specific categories of information that the companies regard as confidential and request the employee to sign it.

On exit, request the departing employee to return all the confidential documents in their possession. This includes all the items and documents that are off the premises. You can draft a list of these items and agree in writing the specific date that the employee should return them.