Trade Secret & Restrictive Covenant Counsel

Congratulations, your company has found a great new employee to hire or you personally have found a new company with the right culture where you wish to advance your career. Standing in the way, however, are various restrictive covenants that were signed with your old employer. These covenants typically fall into one of three categories:

• Non-solicitation: These provisions are designed to restrict departing employees from soliciting clients, customers, or employees from their former employer.
• Non-competes: These provisions are designed to prevent employees from joining or starting a competing business typically within a specified period of time and/or within a defined geographic area.
• Non-disclosure/confidentiality: These provisions/clauses are designed to prohibit employees from disclosing and/or utilizing confidential and proprietary information obtained during their employment.

While you may have signed a contract that contains these types of provisions/clauses, this does not mean there are not potentially creative solutions. The law is not unlimited in its protection of restrictive covenants, and many suffer from certain weaknesses such as being overly broad in scope, overly broad in duration or may be over inclusive in job activities that it covers. Additionally, the contract at issue may lack consideration or contain ambiguous language that could permit certain types of work.

In addition to restrictive covenants, you should also consider if there are any trade secret issues with your former employer. While most people think of trade secrets as something highly secretive (like the formula for Coca-Cola), the laws defining trade secrets are more broad and may extend to information that provides a competitive advantage such as formulas, processes, marketing strategies, and/or manufacturing techniques. During any job transition, employees must be mindful of their obligation to protect trade secrets and to avoid any unauthorized use or disclosure. Even if you do not have a contractual obligation to protect your employer’s trade secrets, there may be common law or state/federal statutes that restrict your ability to take and/or use information at a new employer.

However, just like with restrictive covenants, trade secrets also have limitations as to what qualifies for protection. For example, information may not qualify as a trade secret if there were not proper steps taken by the employer to protect the information or the information is public by other legitimate means.

Whether you are an employee or an employer, having legal counsel by your side during a job transition is invaluable in navigating restrictive covenant and trade secret issues. For the employee, while you may get gratuitous advice from those around you, it is your livelihood at stake. For the employer, the competitor you are recruiting from may have a litigious reputation or have other business reasons to want to interfere with the hire. In either case, it pays to have counsel with a depth of experience in this area on the front end.

Before finalizing that new hire or taking a new job there are many areas where sound legal advice may be needed, including:

• Reviewing restrictive covenants, such as non-competes, non-solicits, and confidentiality restrictions to understand the restrictions in place;
• Counseling on the applicable state and federal trade secret laws; and
• Dealing with garden leave provisions and/or other notice requirements.

If you are contemplating a new hire who has various restrictive covenants or trade secret issues or are personally considering making a move to a competing employer, PCJ Law can be a resource and partner to help represent your interests and defend your company or your livelihood.

If you need help in a job transition or your company needs help in the recruitment of new talent, contact the attorneys at PCJ Law to discuss the specific facts of your situation at 901-820-4433.