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The Online Advisor - May 1999
Protect your company's trade secrets when an employee leaves
Many companies rely on their trade secrets to keep one step ahead of their competitors. Important trade secrets include customer lists, marketing plans, and details about new products or programs. Your company should establish and implement proper safeguards to protect these trade secrets.
The first step is to plan ahead. For example, consider requiring key employees to sign nondisclosure and noncompetition clauses, which can be part of an employment contract. To limit access to sensitive information, documents which contain trade secrets should be stored in locked file cabinets and stamped "confidential." Computer data files should be off limits to all but a few authorized individuals. Steps like these will demonstrate to employees that management places a high value on the company’s trade secrets and will not tolerate leaks of sensitive information.
Companies need to be particularly concerned about protecting trade secrets when an employee resigns or is fired. Upon starting a new job, the former employee might try to pass sensitive company information to a competitor. To reduce this risk, hold an exit interview with every employee who leaves the company. During the interview, ask these employees to sign a written acknowledgement indicating that all sensitive company information has been returned or destroyed.
Also, remind terminated employees that they are still obligated to refrain from disclosing any of the company’s trade secrets. If an employment agreement was previously signed, the nondisclosure and noncompetition clauses should be reviewed at this time. Holding the exit interview will be management’s final opportunity to demonstrate that they intend to vigorously protect their company’s trade secrets.