Guidelines before Hiring a New Employee to Shield from Trade Secret Misappropriation

February 23rd, 2012

The following guidelines may assist a hiring employer to avoid legal risk involving trade secret misappropriation of new hires:

  1. Don’t rely solely on the previous position of the employee: This is risky for a hiring employer if all it does is consider only those employees who have previously worked in the same position.  Switching between companies, but working in the same position, is likely the situation where trade secret lawsuit invokes.  Familiarization of duties and roles could be one of the criterions but it should not be the only one.
  2. Be careful during interview: During the interview process, if a potential employee starts revealing confidential information of her previous employer, an interviewee must warn her and refuse to hear about the subject in further detail.  Incidental uses of trade secret owned by other companies can make a hiring employer liable under trade secret misappropriation.
  3. Investigate the application: As discussed in (1), the previous position held by an employee may inevitably lead to disclosure of a trade secret in a new position.  A hiring employee therefore must look into the roles and duties that the employee has been working.  If there are overlaps of current and previous duties, there are at least 2 ways to fix this: (a) a hiring employer might limit the responsibility of a new employee so that it does not involve the same duty as that of the previous company; and (2) a hiring employer might restructure the roles and duties of a new position in order to avoid potential trade secret lawsuits.
  4. Request the previous record of the employee: In order to safeguard against the future liability over trade secret misappropriation, a hiring employer should request any records that it thinks necessary regarding an employee’s previous employment.  For example, a hiring employer might request a former employment contract with a previous employer.  A hiring employer then analyzes and makes sure that there is no hidden term that restricts the employee’s future employment.  This is critically much more important when an employee’s previous employment contract contains a non-compete clause.  In this case, a hiring employee must make sure that if he hires this employee, he does not violate this clause.  There are 2 ways to avoid such violation: (1) a hiring employee may claim that this clause is invalid or unreasonable, and therefore unenforceable; or (2) the new employment does not relate to the previous employment.  However, such action will probably lead to future lawsuit that a hiring employer must keep in mind.

An expert trade secret attorney is able to analyze and investigate the previous employment contract and ensure that a hiring employer does not misappropriate any trade secret because of hiring its new personnel.



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