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Protecting trade secrets before a layoff

Trade secrets can be the lifeblood of a company’s success.

These confidential pieces of information – such as customer lists, product formulas, and strategic plans – can give a company a competitive edge in the marketplace.

However, when an organization undergoes layoffs, it is at increased risk of trade secret misappropriation as departing employees may seek to take valuable information with them.

Here are some tips for employers looking to safeguard their information before a layoff occurs:

  • Review and update confidentiality agreements: Take a close look at your organization’s confidentiality agreements and assess whether they provide adequate protection for your trade secrets. Ensure that the agreements are up to date with current law. For example, per the National Labor Relations Board’s recent decision in McLaren McComb, confidentiality agreements must not be overly broad such that they could prohibit employees from exercising their legal right to discuss their wages, hours, and conditions of employment.
  • Provide ongoing education: Reinforce the importance of confidentiality through regular communication. Include reminders of the organization’s confidentiality policies and how to report suspicious behavior. Remind employees that the work they do for your company belongs to the company.
  • Monitor for unusual activity: Monitor employee activity on company systems. Look for unusual activity, such as large file transfers or downloading files outside of an employee’s typical job responsibilities. That can help you detect unauthorized downloading or sharing of confidential information.
  • Limit access to sensitive information: Restrict employee access to information. That can include limiting physical access to certain areas of the workplace or using digital access controls to protect sensitive data.
  • Create a termination checklist: Develop a checklist of tasks that must be completed before an employee’s departure, such as returning company property, signing exit paperwork, and confirming they understand their obligations under any confidentiality agreements. Also, consider implementing policies that require departing employees to certify in writing that they have returned all company property and deleted all company information from personal devices.
  • Terminate account access promptly: Work with your IT department to ensure that access to company devices and accounts is immediately revoked upon termination.
  • Preserve the employee’s hard drive: Maintain the employee’s hard drive for a reasonable period of time. That preserves evidence of the employee’s activities and can be used for forensic analysis if you suspect misappropriation of trade secrets.