How to limit employees from stealing your Company’s Trade Secrets upon hiring and termination.

Table of Contents

• Upon Hire:
• Upon Termination:

At Sutter Law PC, one of the first things we advise startups is to ensure they have a robust Trade Secret protection plan.

The best method for limiting the misappropriation of a Company’s Trade Secrets is to take a proactive approach upon hire.  However, there are also methods for ensuring Trade Secret protection after hire at termination.  We will discuss some of these methods below.

Upon Hire:

We recommend that the Company begin by requesting that the new hire return all their previous employer’s confidential information and property before starting the new job, including:

    ○ Copies of any work product

    ○ Customer lists

    ○ Business or marketing plans

    ○ Employee handbooks

    ○ Access badges or cards

    ○ Keys

    ○ Computers

    ○ USB drives, flash drives, or external hard drives

    ○ Phones

    ○ Company credit cards

The Company should also ensure that the new hire is not under any pre-existing confidentiality obligation or other restrictive covenants, and if so, to bring that to your attention to determine whether or not it is enforceable.

Next, we recommend that all new hires receive the Company’s Confidentiality policy (and if there is not one in place, you should have the Company’s attorney draft and disseminate the policy before the new hire begins).

  You should also require new hired to acknowledge receipt of the policy and ask questions if they are unclear.

 New hires should also sign a Confidentiality Agreement which prohibits the receipt, copying and disclosure of confidential or trade secrets learned while under the Company’s employment.

There should also be special technical measures to protect electronic information involving the Company’s computers, phones and other electronic devices. 

Third Party access should also be curtailed in the event that Company equipment is lost or stolen. 

Training for supervisors onboarding new employees should also be provided on at least an annual basis. 

Advise new hires to return their former employers’ confidential information and property.

New hires should return their previous employer’s confidential information and property on or before their last day of employment with the previous employer.

Such information and property may include, among other things.

Upon Termination:

If the above polices have not been implemented and the Employee is being terminated, then we recommend the following:

1. Have your corporate counsel prepare a Separation Agreement which requires at the minimum the following:
2. Severance pay as consideration to enforce a restrictive covenant for departing employee
3. Return of all proprietary materials
4. Cooperation in ongoing and future litigation
5. Conduct and Exit Interview if Possible
6. Review the Confidentiality Agreement and Policies

• Review departing employee’s servers and files to ensure that all confidential information is preserved properly.

• Revoke departing employee’s access to servers, files, and social media accounts.

If you would like assistance in preparing Confidentiality Polices upon hire or if you need assistance after terminating an employee, please reach out to Corporate attorney Kristina Pedroso at Kristina@sutterlegal.com.