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April 21, 2021 Practice Points

How to Avoid Potential Trade Secret Claims When Hiring New Employees

Tips to guide employers and their counsel though the process of interviewing new employees to confirm they have not retained trade secrets of a former employer

By Sarah Horstmann

Employees are increasingly using personal laptops, cell phones, and other electronic devices for work purposes, in part due to remote work arrangements as a result of COVID-19, making it more complicated for employees to return company information at the end of employment. Employers hiring individuals who may have had access to trade secrets or confidential information of their former employer should keep this in mind and take steps to minimize the risk that that the individual has retained trade secrets or confidential information that could expose the new employer to trade secret misappropriation claims. Simply requiring the individual to represent that he or she has not retained trade secrets or confidential information of the former employer, while useful, may not be enough—the new employer may want to interview the individual to find out all locations where trade secrets and confidential information might exist, and then decide on a plan for any necessary remediation. Below are a few tips to guide employers and their counsel through this interview:

  1. Conduct the interview before the employee begins work and before the employee is given access to the new employer’s email system, servers, intranet, or cloud storage accounts. In the event the individual has retained information of the former employer, this may help minimize the risk that the employee will use it on the new employer’s behalf or transfer it to the new employer.
  2. Ask the individual to identify all electronic devices and accounts used for any purpose (both work and nonwork) during the time that the individual was working for the former employer. Develop a comprehensive list, asking specifically about laptops, desktop computers, tablets, cell phones, email accounts, cloud accounts (such as Google Drive or DropBox), and external storage devices (such as USB drives).
  3. For each device and account issued by the former employer, confirm that the devices have been returned and that the individual’s access to all the accounts has been terminated. If not, instruct the individual not to access any such devices or accounts, and do not permit the individual to begin work or have access to the new employer’s email systems, servers, intranet, or cloud storage accounts until the devices have been returned and access to the accounts has been terminated.
  4. For each personal device and account, ask the individual whether, to the best of his or her recollection, it was ever used for work purposes or could potentially contain any information of the former employer. Some targeted questions can be helpful to cover areas that might otherwise be overlooked. For example: Did you receive your work email on your personal cell phone, and if so, did your former employer remove that program from your cell phone already? Did you use your personal cell phone to send text messages for work purposes? Did you ever send work emails to your personal email address—even simply to print a document or access a presentation? Did you send any information to your personal email account or copy information to a USB drive when your employment ended—for example, personal records, photos, or documents you created during your employment that you might consider to be “yours” but that your former employer might view as company information?
  5. Instruct the individual not to access, alter, or delete any information of the former employer. If the individual is unsure of whether a device or account contains information of the former employer, he or she should not perform any investigation to verify because the individual could unintentionally access confidential information or trade secrets of the former employer. For example, if the individual has various thumb drives in a drawer at home and cannot recall whether any were used for work purposes, the individual should not plug the thumb drives into a laptop to see what is on them, and instead sequester and not access them.
  6. If the individual identifies devices or accounts that contain, or may potentially contain, trade secrets or confidential information of the former employer, immediately instruct the individual to sequester and not access the devices and accounts. Consider sequestering any devices with outside counsel. The employee or the new employer may then want to reach out to the former employer to discuss a process for returning or deleting the information.

Sarah Horstmann is a partner at Maslon LLP in Minneapolis, Minnesota.

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