From the February 2006 issue of Entrepreneur

When employees leave your company to work for a competitor, make sure they don't take your competitive edge with them. The law protects trade secrets, but only if employees understand the information is confidential.

Consider a recent Illinois case, Liebert Corp. v. Mazur. Four sales representatives resigned from a company to accept positions with a competitor. Just before leaving, one of the reps downloaded huge quantities of company data. The ex-employees were sued.

The court ruled that the downloaded customer lists and sales quotes were not trade secrets protected by law because the company did not adequately protect them. The court was "troubled by [the company's] failure to either require employees to sign confidentiality agreements, advise employees that its records were confidential, or label the information as confidential."

What's the lesson?

  • Allow computer access to critical information only on a need-to-know basis.
  • Have employees sign confidentiality agreements.
  • Label critical documents as confidential.
  • Require a separate log-on for confidential pages stating that by logging on, employees agree to keep the information confidential.

These simple steps will not only make your expectations clear to employees, they will provide you with legal protections as well.

Jane Easter Bahls is a writer in Rock Island, Illinois, specializing in business and legal topics.