Trade Secret Protections

Author: Melissa A. Silver, XpertHR Legal Editor

The new Defend Trade Secrets Act (DTSA) standardizes and strengthens employers' legal remedies and protections by allowing an employer to file a private cause of action in federal court for trade secret misappropriation. Prior to the DTSA, employers were left with a patchwork of state laws providing trade secret protection and a limited ability to file a claim in federal court to safeguard their trade secrets.

Employers can reap the benefits of this new law with these steps.

1. Understand the Type of Information Protected and Remedies Available

The DTSA defines the type of information that is protected and the remedies available to an employer if the employer's trade secrets are misappropriated. Employers need to understand the law in order to take advantage of the law's benefits. To that end, employers should review how it affects their employment practices in the following areas:

2. Update Employment Contracts, Policies and Handbook Statements That Contain Nondisclosure Clauses

A unique provision of the DTSA is that it provides immunity to whistleblowers who reveal a business's trade secrets to a government official or his or her attorney regarding a suspected violation of law. Under the DTSA, an employer is required to provide notice to employees about this immunity in its nondisclosure or confidentiality agreements entered into on or after May 11, 2016. Employee is defined to include independent contractors and consultants.

An employer is considered to be in compliance with the notice requirement if it provides a cross-reference to an employer's reporting policy or handbook statement that is provided to the employee. If an employer fails to provide notice, it may not be awarded exemplary (punitive) damages or attorney fees in an action against an employee to whom notice was not provided.

As a result, employers should update the following documents to include the DTSA's whistleblower immunity notice:

3. Train Supervisors

Supervisors need to be trained about: