Protecting Employer Information

You must often give certain employees access to confidential information so they can do their jobs. Concern naturally arises as to what the employee can do with that confidential information, particularly after the termination of employment. An ex-employee could use confidential client lists, trade secrets, formulas or techniques to compete with their former employer, making the ex-employee a formidable business competitor.

Noncompetition Agreements Generally ProhibitedNoncompetition Agreements Generally Prohibited
section 16600 invalidates provisions in employment contracts or noncompetition agreements that prohibit an employee from working for a competitor after completion of his/her employment or imposing a penalty for doing so, unless they are necessary to protect your trade secrets
Read about 2024 legislation.

Trade SecretsTrade Secrets
Whether you can prohibit an employee from using information gained from you in future employment is essentially dependent on if that information can be classified as a trade secret, a term that is somewhat misleading. The term "trade secret" implies a highly protected, extremely secretive method of production and conjures up images of "Secret Formula X"; in a guarded vault. In fact, the definition is much more broad in relation to the area of employer confidentiality.

Confidentiality PolicyConfidentiality Policy
An employee handbook that includes a broad confidentiality policy or restricts reasonable employee speech violates both state and federal law.

Soliciting CustomersSoliciting Customers
An employee can notify customers that he/she is severing his/her business relationship with you and engaging in business for himself/herself, even before the employee resigns.

Unfair CompetitionUnfair Competition
Unfair competition is a generalized term for business conduct that is contrary to honest practice in industrial or commercial matters.

Employee InventionsEmployee Inventions
If you have employees who conduct research and who may invent products or devices in the course of that research, establish an agreement with those employees from the beginning of employment.

Forms

Confidentiality Agreement

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