Preventing Employee Theft of Company Property and Information

Theft of company property and information by employees is a growing concern among businesses.  While working for your company, employees have daily access to information about the way your business operates, software it uses, customer information, vendor information, financial and banking information, e-mails, and the list goes on and on.  When an employee leaves your company to work for a competitor, what protection does your business have to ensure that your former employee does not misuse or disclose your company’s confidential and proprietary information?

Protections of State and Federal Law

State and federal laws (such as the Defend Trade Secrets Act of 2016) provide some protections.  However, requirements and protections of state laws vary widely from state to state.  The Defend Trade Secrets Act is a federal law, enforced by federal courts.  It has many requirements that your circumstances may not meet.  There are also legal questions about what happens if its definitions and requirements conflict with state laws.  It’s impossible to determine whether state and federal laws afford protection until after the misappropriation has occurred.  If the specific legal requirements are not met, the laws afford no relief.  Laws also change, so what may protect your business this year may not at all next year.  They also have remedies that may not be appropriate or helpful to your circumstances and business.  Reliance only on the protections provided by state and federal law leaves your business exposed to harm without an assurance of relief.

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Contract Remedies

More and more businesses are turning to employment contracts to ensure themselves against theft of company property.  Employee contracts, non-disclosure agreements, confidentiality agreements, and non-solicitation agreements provide better protections for your business.  Contracts specifically set out the duties and obligations of employees to protect your business and keep its property secret and safe.  Contracts also expand the remedies available to your business in the event of theft or disclosure.

General Counsel Assistance

Outside general counsel can draft contracts that will provide the most protection for your business.  Forms found on the internet may not be drafted under your state’s laws.  They also are not geared toward your business or circumstances.  The better practice is to have an attorney craft documents specific to your business.  Use of general counsel is a wise investment in security for your business.

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