When a former employee misappropriates your company’s secrets in violation of their non-compete agreement with your company, it may feel like a punch in the gut and you may not know how to respond.
What do non-compete agreements protect?
Non-compete agreements protect a variety of business interests. They prevent employees from working for a competitor, or providing them information, within a certain geographical area and/or period of time after leaving your company. They may also prohibit employees from using company trade secrets if they decide to start their own business. By law, California does not enforce these agreements in most circumstances. But your company – and many others in the state – may use a properly crafted non-compete agreement, in conjunction with a non-disclosure agreement, to discourage the misappropriation of your business information.
Will employees face consequences?
You may have concerns that a former employee will use or reveal your company’s trade secrets. California does not recognize inevitable disclosure doctrine. This doctrine assumes an employee would use your secrets in their new role and enjoins them from doing so. Yet, your company can receive injunctive relief if the employee has threatened to appropriate your secrets. A court-ordered motion will stop them from acting on their threats. When your former employee uses your company’s secrets for personal or business advantage, they have committed theft. In this case, you can file a lawsuit against them for stealing your information.
Understanding the difference between non-compete agreements and non-disclosure agreements, and how they can be applied in California, will help you to implement the appropriate, enforceable safeguards to protect your business secrets.