2 ways to protect trade secrets in your employment contracts

On Behalf of | Apr 21, 2022 | Business Law

Employees can be a source of expensive disputes for a business. They can also gain access to the information that makes your company competitive and then share those secrets elsewhere. Trade secrets are any information that gives your company a Competitive Edge and is not readily accessible to the public.

Your client list, your recipes and even your unique chemical processes could all be trade secrets that you want to protect. Your employees will have access to this information and could therefore affect your business’s future financial success.

Companies often have numerous kinds of protection in place for their trade secrets. They may keep certain information locked down so only a handful of people have access. They can also include special provisions in their employment contracts to protect them from employees sharing that information later and damaging their business. There are two kinds of restrictive covenants that you can potentially include in your contract to better protect your trade secrets from your workers.

Non-compete agreements

Non-compete agreements are probably the best-known restrictive covenants used in employment contracts. They prevent your employee from working for known competitors or starting a business that directly competes with your company. They have also been the subject of much recent legal scrutiny.

Although the Texas civil courts do uphold non-compete agreements, there are numerous limitations on their enforcement. Small mistakes in the language that you use or failing to offer something of valuable consideration when an employee signs a non-compete agreement could undermine what protection such a clause offers your company.

Non-disclosure agreements

Non-disclosure agreements aren’t just contracts people sign after settling a lawsuit outside of court. They can also be part of an employment contract. You can effectively bind your employees from sharing certain trade secrets with anyone when they leave your company. It is often easier for businesses to enforce non-disclosure agreements than non-compete agreements.

Depending on the role the employee will fill, the timing of the contract and the nature of the secret, you may need to include one or even both of these restrictive covenants in your employment contracts. Integrating the right business protections into your employment contracts can help your company protect its Trade Secrets and remain competitive.