Breach of Confidentiality
What is a breach of confidentiality?
Some (in fact, probably most) employees have access to the business' confidential information, such as business secrets, client lists, suppliers and processes. Employees do not always protect this information as closely as their employers might wish. This puts companies at risk of having their confidential information revealed to competitors.
Why do we need to protect our confidential information?
In some industries, confidential information is the single most important key to business success. It is not unusual, for instance, for competitors to attempt to "poach" specialized sales employees in order to benefit from company connections, contact lists, and pricing models.
Are all employees bound by confidentiality?
Not necessarily. After employment ends, only a very select class of employees (those known as "fiduciary employees") are automatically bound by duties of confidentiality. A fiduciary employee is a very senior employee to whom the business is vulnerable by exercise of that employee's discretion, or employees who are the "public face" of the company. So, for instance, a certain sales employee might be key to your company's ongoing success, but might not be a fiduciary employee, leaving your company's confidential information vulnerable.
How can we ensure our employees protect our company's confidential information?
There is no way to absolutely guarantee that your confidential information will be protected, but there is a lot you can do towards legally safeguarding your company's interests. First, ensure that employees who will have access to confidential information sign confidentiality agreements in their contracts of employment. Ensure that those contracts have been drafted and reviewed by an employment law specialist, to maximize the chances that the confidentiality provision can be enforced in court. Lastly, keep detailed tabs on your confidential information, including a requirement that all employees return originals and destroy copies of documents at the end of their employment.
What can we do if a former employee has taken our confidential information to a competitor?
If a former employee has taken your company's confidential information to a competitor, it is time to consider legal action. A fiduciary employee or an employee who has signed a confidentiality agreement can be sued for breach of confidentiality, as well as any person or entity who was complicit in the taking of confidential information, such as a competitor company attempting to poach that employee.
What relief can we pursue in an action for breach of confidentiality?
If you have compelling evidence that your business will suffer harm, you can seek an injunction from the court, barring the parties from taking certain action (such as sharing the confidential information, reaching out to contacts on confidential client lists, etc.) At trial, you can recover damages from the ex-employee and/or other complicit parties on account of the misuse of confidential information. The damages can either represent a proven loss of profits suffered as a result of the loss of confidential information, or a disgorgement of the profits earned through the use of that confidential information.
What can Hyde HR Law do for my company?
The lawyers at Hyde HR Law are experts in confidentiality obligations, and actions by employers for breach of confidentiality against ex-employees and competitors. We draft employment contracts, advise you on best practices for safeguarding your confidential information, and represent you in legal proceedings to enforce your legal rights. Contact us today.