Cary and Brenda Jensen worked for the Lodge at Mount Snow, placing ads and organizing bus tours for senior citizens groups. After six years, the Jensens quit to open a competing business, the Autumn Inn.
The Jensens took a copy of the Lodge's customer list and contacted the customers to inform them of the move. The poaching worked. Nine of the 11 bus tours booked by the Jensens in their first season were customers who had canceled reservations at the Lodge and rebooked at their inn.
Make sure such a records-management mishap doesn't cost you revenue! Get Taming the Paper Monster to access step-by-step records retention guidelines
The owner of the Lodge sued under the state's trade secret law for, among other things, contacting the customers from its list rather than tracking down business from scratch. Vermont's law is based on the Uniform Trade Secrets Act, which 41 states have adopted in some form. The law requires two elements for information to be considered a protected trade secret:
1. Economic value. The information must have independent economic value that is not readily accessible to others. For example, a list of people who have already purchased a product is often much more valuable than a general list of people who might be interested in that product.
2. Confidentiality. The business must have made reasonable efforts to maintain the information's secrecy.
How safe are your records? Get:
Buy Taming the Paper Monster now!
- The lowdown on onsite vs. offsite storage — what to consider, how to decide
- 3 guidelines for protecting confidential files
- A 21-point program to raise employee information security awareness
- and much more...
Result: The state supreme court sided with the Jensens. While the Lodge may have passed the first part of the test, it failed miserably on the second.
Why? The Lodge had openly posted the names of its customers on a large reservation board in an office where all employees and any visitors could see them. The employees had no written noncompete agreement. The Lodge didn't even tell employees that the information was considered confidential. (Dicks v. Jensen, No. 2000-102, Vt. S.Ct., 2001)
Advice: Be explicit in telling employees that sensitive business information is confidential, and require them to sign confidentiality agreements to protect valuable information. Keep such information under lock and key, stamp it "Confidential" and limit access to employees on a "need-to-know" basis.
Taming the Paper Monster also includes:
- Record-keeping requirements of the 19 most important federal laws
- A Records Retention Guide – five pages of tables that identify hundreds of types of records and documents, and tell you how long each one must be retained.
- And an Appendix listing contact information for government offices, regulatory agencies, associations and other organizations that offer further resources for effective management of files, records and electronic data.
- Make sure 'executive exemption' fits, or you could be liable for huge FLSA damages
- Prepare for parades, pickets and bullhorns: Court lifts limits on many strike activities
- Monitoring the virtual water cooler: Facebook and beyond
- EEOC wrings $500,000 out of Everdry in harassment settlement
- Three goals for June