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Protecting Trade Secrets, Confidential Information and Customers
“Non-compete” agreements are vital to safeguard your company.
“The era of gold watch retirements is somewhat a thing of the past. The mutual loyalty between companies and their employees is now more rare. While employees have a “right to work” beyond their employment with a company, they do not have a right to pillage the former employer in the competitive battle of business.”
— Paul O. Lopez
Take action to protect company intelligence. Though it is generally difficult for companies to prevent employees from working for a competitor, Florida’s non-compete statute does provide employers with certain levels of protections for “legitimate business interests,” including protection against the use and disclosure of the company’s confidential information and trade secrets. The first legal litmus test is whether or not a company has taken measures to protect the information. A former employee cannot generally be held accountable for divulging information to a competitor that the company allows to be shared in any public forum or information that the company fails to take any reasonable steps to ensure that it remains confidential.
Clearly define relationship expectations up front. Companies are eager to recruit strong relationship-builders to their team — especially a sales team — knowing business is often about relationships. However, companies must be proactive in spelling out the expectations of relationships built in connection with conducting affairs for the company. When a sales rep and customer begin their business relationship, it is on the company’s dime. Thus, to protect that relationship it is important to have a carefully drafted non-solicitation or non-service agreement that will ensure that he/she cannot pursue or contract business with a company-originated customer for a stipulated period of time (up to two years under Florida’s non-compete statute).
Track company investment in an employee. Some companies have a significant industry learning curve or require very specialized training in their proprietary system operations, and Florida law recognizes that it would be unfair for the competition to get the benefit of all of the training that a former employer provides the employee. So when new employees require extraordinary training, restrictive covenants need to be drafted to protect that investment. In order to enforce those covenants, it is advisable for employers to have documentation of the company’s investment in training and demonstrate that training is proprietary and significant for that company.
Since it can be a very grey area, be proactive. The enforcement of non-compete agreements is very fact-intensive, and the outcome of the case can sometimes boil down to a judge’s interpretation of the minutiae. There are usually many parts of the battle that fall into grey area, and the result may not be clear at the onset. It is very important to have as much as possible clearly defined, maintained — and documented — in black and white. Periodic review of your company’s non-compete agreements is critical to ensure that they are consistent with existing precedents. If they are more than three years old, they need to be updated. Additionally, well-documented actions taken to support the company’s investment can be the deciding factor when a judge is on the fence trying to decide where the black line is drawn in the grey matter of dispute.
About the Author Paul O. Lopez, a director and the chief operating officer for Tripp Scott, has chaired the firm’s Litigation Department since 2010. Mr. Lopez leads the firm in experience with complex business litigation including labor and employment and workplace and employment law compliance counseling.
For more than 40 years, Tripp Scott has played a leadership role in issues that impact business such as employment law. This is shared as information on safeguarding your company’s trade secrets.
