Violation of Trade Secrets: Protecting the Interest of Employers by:Nemelou Despuez

Under the California law, employers are prohibited to have non-compete agreements

or any contract that will prevent workers to engage in lawful profession, trade, or business. This law is often perceived as pro-labor that will allow people to earn their living.

The state law also prohibits employers to terminate workers who refuse to sign a non-compete agreement. Anyone who will violate this statute law is liable for wrongful termination claims.

Excerpt from the Business and Professions Code section 16600:

"Every contract by which anyone is restrained from engaging in lawful profession, trade or business of any kind is to that extent void".

Since there is a mention that workers will not be restrained from "engaging in lawful profession, trade, or business of any kind", many courts have interpreted that the law does not protect former employees who engage in "unlawful" business activities that compete with their former employers.

While it may be difficult to enforce policies that will protect the interest of California employers, they can adopt certain guidelines that will safeguard their sensitive information and prohibit workers from doing something which is in violation of the company policy.

If possible, do not allow workers to get access of sensitive data such as vendor lists and contacts, customer lists and contacts, pricing lists, product formula and other information, testing results, and business strategies.

Employers should include a confidentiality provision in the employment agreement stating that trade secrets mentioned above will not be used by workers who will seek employment to rival companies. (However, employers in California cannot restrict former employees in working for other businesses even if these directly compete with the company.)

The employment agreement should include a clause that will prohibit employees from soliciting their companies' workers in case they will resign.

The employment agreement should include a clause clearly stating that employees cannot establish or engage in a business that competes with their employers while they are still currently employed.

A clause in the employment agreement stating that former employees cannot solicit their previous employers' customers.

Employers should include in the employment agreement that all the company's properties such as computers, documents, and data should be returned after resignation or termination.

By following these guidelines stated above, employers can protect their own interest and the company's sensitive data and trade secrets even without non-compete agreement. However, companies which operate outside California or in other states which allow non-compete agreement are usually advised to have this contract.

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