Protect Confidential Information and Trade Secrets with a Non-Compete Agreement

black binder wrapped in chain with padlock, non-compete agreements

There’s no denying that the COVID-19 pandemic has led employers and business owners across the country to make difficult decisions to terminate or lay off employees to cut costs and prevent additional losses. 

it’s worth noting that these layoffs have more to do with the current economic crisis, owing to the wave of uncertainty brought on by the coronavirus, and less to do with the performance of these employees. Some of the employees that have been let go are subject to a non-compete agreement. 

It goes without saying that enforcing non-compete agreements against employees that have been laid off is a difficult decision to make, regardless of the circumstances, but the current climate has made it even worse for employers. 

In this blog post, we’ll take a look at how non-compete agreements can help employers protect themselves against the unfair use of confidential information and trade secrets in the event where their former employees end up working for their competitors.

How Do Non-Compete Agreements Work?

Restrictive covenants that are found in employment contracts and non-competition agreements are often used by companies across many industries to protect themselves against the disclosure and use of confidential information and trade secrets

This is why many employers ask their employees to sign agreements as a condition of employment that restricts them from participating in competitive activities for a specified period of time after they’re terminated. 

As a business owner, you should be reasonable and judicious while utilizing these devices because courts universally recognize that these kinds of restrictive covenants are a restraint of trade. 

Even though the law that governs the enforceability of these covenants varies from state to state, every jurisdiction requires a close examination of non-compete agreements and places constraints on the extent employers can go in order to prevent or limit the activities of their employees post-termination. 

Factors You Should Consider Before Enforcing Non-Compete Agreements

Before you can enforce a non-compete or terminate an employee who is subject to this kind of employment agreement, you need to determine whether your company’s non-compete is enforceable under state law. Every state has different, typically stringent tests that are used to determine whether a non-competition agreement is enforceable or not. 

In the current climate where we’re seeing a significant rise in employee lay-offs, courts may deem it appropriate to apply rules of construction that are favorable to the employees and support unenforceability. This is why it’s advisable to seek advice from a qualified business law attorney before enforcing a non-compete or taking legal action against a former employee.

How to Protect Confidential Information and Trade Secrets

Let’s take a look at some steps you can take to protect competitive intelligence and prevent or minimize the fallout in the event where a departing employee has used confidential information that you’ve disclosed to them unfairly. If you plan to terminate or lay off some of your employees to protect valuable trade secrets, here’s how you can plan in advance:

1. Restrict Their Access to Sensitive Data

Before terminating the employee, make sure you have control of the credentials they used to log into their accounts and have access to the data that’s been logged by them. Immediately after their departure is effective, be sure to restrict their access to all data and get the IT administrator to take control of all of their accounts. 

2. Demand the Return of Confidential Information 

Issue a written demand to them to return confidential information and trade secrets that have been disclosed to them any other employer-issued property. Remind them that they are prohibited from retaining or using any copies. If these obligations are listed in the restrictive covenant agreement, don’t forget to reference those provisions in the written demand. 

3. Carry out an Investigation for Suspicious Behavior

If you suspect them of theft or any other wrongdoing, it’s advisable to investigate and examine their activities to find evidence that supports your suspicions. With the assistance of your IT team, you can check for any suspicious behavior like copying files with sensitive data, use of a personal jump drive, or anything that seems unusual or out of the ordinary. 

If the investigation has provided evidence of theft, you need to take appropriate action. The least you can do is issue a written demand for return of the stolen information and notifying their new employer of the wrongdoing. You need to act quickly and take legal action, if necessary, to make sure no additional damage is done. 

Do you live in Orlando, Miami, or Jacksonville, FL? Get in touch with Boyer Law Firm, PL, to learn about the factors you should consider before enforcing a non-compete and how you can protect valuable competitive intelligence from theft.