California Labor Laws On Trade Secrets Between Employers and Ex-Employees

The California labor laws offer some general rules when dealing with trade secrets in the employment industry. However, this is a relatively new concept so you can expect the existing policies are subject to change or revision at some point. For now, it is important to address how trade secrets are being protected by the law to ensure employers rights are preserved.

In order to understand how to properly deal with trade secrets based on the California labor law, it is important to define it first. A trade secret is any information that is generally withheld to the public on a purpose because of its economic value to the owner of that information. For this reason, the owner of that information takes considerable steps to ensure that it is kept confidential and only the concerned personnel are allowed access to the "trade secret". This is a common concept utilized in the business industry because several products manufactured in the market are produced under "trade secrets" to prevent competitors from utilizing the same information to gain market advantage over its original owner. Some of the examples of information considered as "trade secrets" include secret formula, codes, prospect or client list, business process or methods, among others.

The policies on "trade secrets" become highly complicated when dealing with ex-employees for a given company. If they had previous access to this confidential information, they hold that information with them even if they are no longer part of the organization. The possibility of the information being misappropriated is one reason for employers in California to be concerned about. To avoid employer liability while at the same time protecting the interest of your business, it is important to understand how the law deal with this kind of information and how it is handled.

An interesting take that the California labor law assumes in this matter is the fact that it honors competition in the marketplace. Thus, any agreement that is established around the use of "trade secrets" is void, provided that an individual that has access to a sensitive information does not employ it for unlawful purposes. According to the law, it is important that the information is not used in bad faith, illegal, or unethical purposes because only then the court will refer to it as "unfair" practice.

An ex-employee is freed from any legal complications associated with pursuing any business endeavor that is of similar industry as that of their previous employer. It is important, however, that the employee can prove that they did not leverage their knowledge of the "trade secrets" or competitive advantage obtained through their stint in the company to compete against a former employer. Again, implicit in this idea is that all must be done in "fair" competition.

To make sure that you can protect employer rights, especially if you are handing sensitive business information to employees, you should come up with a written agreement. This will prohibit your employees from utilizing that confidential information when they leave the company and use it against you, in the form of market competition. You can hire a legal counsel to help you prepare this written agreement and ensure that any of your company assets will remain confidential and anyone who breached that agreement will be punished under the California labor laws.

Jose N. Gordon writes about the various aspects on the California labor laws. To preserve your employer rights and ensure that your employees can enjoy the benefit they deserve, make sure to read his articles.