March 17, 2017

Can't Live With 'Em. Can't Live Without 'Em.

by Brigid Heid, Eastman & Smith

While true when talking about the opposite sex, it is equally true when referring to the relationship between employers and employees. Without skilled workers, a business would have no products or services to sell. Workers are the most important asset to any business, but they also pose a significant – perhaps the greatest – risk to the security of confidential business information and success of the business.

After all, employees have easy access to confidential business information and company clients. Disgruntled employees can disrupt systems, ruin relationships, steal information and poach clients and staff, all for their own personal satisfaction or financial gain. Fortunately, employers can take some reasonable precautions to protect their business interests from these bad actors.

Use Non-Disclosure Agreements (NDA’s).
A well-crafted NDA will clearly define the employer’s “Confidential Information,” permissible and impermissible use of that information by employees and the consequences for misappropriation (court injunctions, monetary damages and recovery of attorney’s fees). NDA’s can be used with employees, consultants, vendors or worksite visitors who are granted access to confidential information or processes.

Use Non-compete Agreements for key employees.
Not every employee need sign a non-compete agreement, but tactical use of non-compete agreements for employees with access to confidential business information or who form key customer relationships should be considered. Non-compete agreements are governed by state law and impose post-employment restrictions on employees. To be enforced by the courts, the restrictions must be reasonable under the circumstances to protect the legitimate business interests of the company. States construe non-compete agreements differently and certain states do not enforce non-compete agreements that limit an employee’s right to work for a competing business. Generally, states will enforce reasonable work-for-hire agreements and non-solicitation provisions that limit the solicitation of workers and clients. Knowledgeable legal counsel can help a business draft a defensible non-compete agreement.

Treat confidential information as confidential.
If an employer wouldn’t want its competition to know about it, the information should be marked “CONFIDENTIAL,” “Do Not Copy” and/or “Read ONLY.” Consider password protecting files and only sharing confidential information on a need-to-know basis. Failing to take reasonable steps to treat information as confidential will defeat any attempt to enforce an NDA.

Adopt and enforce policies and practices to protect information.
Should visitors be permitted in all areas? What personal recording devices can be brought on site? Can laptops be taken home? Can files be copied on thumb drives? How is “Confidential Information” secured?

Obtain intellectual property protections.
Patents, copyrights, trademarks and works-for-hire agreements establish the employer’s ownership of inventions and creative works.

These steps can’t prevent an employee from misusing company information or unfairly competing, but they will give the employer the necessary tools to take legal action to protect its business from an employee they could have lived without.

Brigid Heid