Trade secrets (especially those relating to customers, pricing, costs and employees) can be a little like love taken for granted: You don’t notice it until its gone.
California law often protects such information (sometimes called “soft” trade secrets to distinguish them from product formulas and other “hard” trade secrets) from misuse by former employees or competitors. But those protections can be forfeited by an employer’s neglect.
What to Do Before Your Employees Give Notice.
• Make clear to your employees what information belongs to the company and specifically, what information you consider to be confidential, proprietary or trade secret. California law protects employers who designate and take reasonable steps to secure their business information as trade secret, confidential and/or proprietary.
• Establish a system of reasonable practices to protect this information. Those practices can include proprietary information agreements and other policies that make clear to employees that customer information, customer preferences and indeed the customer relationship itself is the property of the employer. These policies must be carefully drafted so as to not run afoul of California laws protecting employees. You should also take additional security steps such as computer passwords and limiting access, labeling restricted access, utilizing locked file cabinets, etc.
Portions of this article first appeared in the January/February 2009 issue of Sacramento Lawyer, the bimonthly publication of the Sacramento County Bar Association. Weintraub Genshlea Chediak thanks Sacramento Lawyer for the right to publish the article, in its entirety, on our website. The article is the copyrighted property of the Sacramento County Bar Association.