Trade Secret and Confidentiality Agreements

Trade secret and confidentiality agreements are typically reserved for high paying jobs or jobs in fields requiring certain expertise. However, it is not just salespeople, managers and executives that possess confidential information. Employers may want to consider having all employees execute trade secret and confidentiality agreements to protect valuable company information.

Colorado defines a trade secret as scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. Many businesses have this type of information but do nothing to protect that information from disclosure by former employees.

If you don’t think there are trade secrets or confidential information in your job, reflect for a moment about the problems your business has encountered and solved. Once the solution is discovered, sure, it seems so easy. However, time and money is spent coming up with the solution. That money came from the employer. A good trade secret agreement will acknowledge that investment and require the employer’s information to be kept secret.

While an employee may not intend to disclose trade secrets, it can happen anyway. In today’s digital world, confidential information exists in many electronic forms and in many different places. Part of a trade secret agreement is getting the employee to return or destroy confidential information when they leave the current employer. For example, emails containing confidential information can reside in the employee’s internet mail, phone and computer. The employee may not intend to disclose that information, but finds a need for it at the new job. A good confidentiality agreement will require that confidential information to be accounted for and returned or destroyed.

A trade secret agreement deters employers from mining confidential information from new employees. A trade secret agreement typically requires disclosure of the agreement to any new employer. The effect is to put that employer on notice that any confidential information from the previous job is off limits. If the new employer proceeds to mine that information from the new employee, legal action may exist against the new employer.

Trade secret agreements do not have to be complex or expensive. Once the agreement is drafted, it can usually be used time and time again.