Departing Employees and Trade Secrets: Minimizing the Risk

You’ve worked hard to build your business. You’ve developed products or services and the processes, policies, and strategies which drive them. So what do you do when a key employee tells you he/she will be leaving? How do you protect the business systems you’ve worked so hard to develop?

Hopefully, you had your key employee execute a confidentiality clause when you hired them. A confidentiality clause (or agreement) requires the person signing it to keep certain information strictly confidential. Ideally, it sets forth the type of information you consider to be a trade secret. You may later use this agreement to protect against competition or disclosure of your trade secrets in the future.

If your key employee is planning to start a business to compete with you or to go to work for a competitor, a noncompetition clause will put you in a position of strength. You can even base a lawsuit on a non-compete clause, although usually only within a limited geographic area and for a limited time period.

To further strengthen your position, before the employee leaves, do the following:

  • Determine whether you want to keep the employee. If you do, find out why he/she wants to leave and address those issues.
  • Review any applicable agreements with the employee and clearly set forth your expectation that they will comply.
  • Determine where the employee is going. If they are accepting new employment with a competitor, put the competitor on notice of your areas of concern and your intent to hold the employee to any applicable agreements that relate to your trade secrets.

If these measures do not work, you may need to bring a lawsuit to protect your trade secrets. To be successful, you must be able to show that you took reasonable measures to protect your trade secrets. Our focus is keeping you out of court and out of conflict. Preparing ahead with well-drafted agreements is a significant part of how we do that. Contact us for a LIFT Audit of your legal, insurance, financial and tax systems today.

This article is a service of Gratia P. Schoemakers, Creative Business Lawyer®. We can help you protect the business you’ve worked so hard to build. We’ll work with you to craft the agreements you need to protect your valuable trade secrets from the outset. Contact us when you are ready for more creative support to grow your business.