Businesses have adapted quickly to subdue the spread of COVID-19 and “flatten the curve,” adopting “work from home” policies and other social distancing measures. Though many businesses continue to operate, for many it is not “business as usual.” Some companies have been forced to furlough and even terminate employees in order to maintain fiscal health and ensure their businesses survive. Many aspects of the “new normal” raise concerns about trade secret protection. One obvious area are the risks posed by remote work, which has led to an exponential rise in cyber threats and an increased risk for “human error” as companies and employees attempt to provide adequate protection for their company’s trade secrets and other confidential information in their home settings. In addition, the increased possibility and likelihood of employee mobility—due to either the COVID-19 furloughs and terminations or concerns employees may have about their jobs being at risk even if currently still employed or perhaps having been forced to take a cut in pay—also creates increased risk to a company’s trade secrets.

One tool that companies often rely upon to protect trade secrets are noncompete agreements, i.e., an agreement between an employer and an employee that for a period of time post-employment, an employee will not work for a competitor of the former employer. Generally speaking, to be enforceable these agreements have to meet a number of basic requirements— the restrictions have to be reasonable in time (limited to typically one but sometimes as many as three years), geography (usually limited to the area in which the individual was employed or in which the business operates), and scope (for example, taking a completely different job than the old one with a competitor may not merit restriction). In addition, the agreement has to further a legitimate business interest—protection of trade secrets being the most obvious, but other interests may satisfy this as well, such as protection of goodwill, customer and supplier relationships, and the investment in training that an employer made in the employee.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]