Confidentiality agreements: Company policy guidelines

A confidentiality policy should be implemented to protect trade secrets and other proprietary information from leaving your organization. Some organizations go even further and make certain employees sign individual agreements.  These agreements and policies are easier to implement than noncompete agreements because state laws are much more restrictive for noncompete agreements in order to protect an individual’s right to earn a living.

1. Is a formal confidentiality policy truly necessary?

Do not take employee discretion for granted! Since trade secrets and other proprietary information can make or break the success of your company, you shouldn’t leave their protection to chance. Instead, establish clear policies concerning the confidentiality, nondisclosure, and noncompetitive use of sensitive information. Use the following clause to introduce your proprietary information and confidentiality policy.

“Employees understand and agree that in the course of employment, they will receive information on projects, practices, customers, and potential customers that is confidential in nature. Employees agree to maintain the strict confidence of such proprietary information both during and after the term of employment.”

Here are some additional steps for enforcing your confidentiality policy.

  • Since different employees know different pieces of information, you may want to talk one-on-one with each worker to emphasize exactly what they are obligated to keep confidential.
  • Disclosures are often made inadvertently, so educate employees on the kinds of situations in which they may unwittingly reveal protected information.
  • Utilize other safeguards, aside from policy, including computer passwords, locked file cabinets, coded documents, and documents clearly marked as confidential.
  • Make it perfectly clear that work-related ideas belong to the company, not the employee.
  • Reiterate why the policy is in place and what the consequences are for violating it.
  • Be prepared to act. Serious violations may require going to court to uphold a non-compete agreement or to prosecute information theft.
2. In addition to having a confidentiality policy, what can employers do to keep their proprietary information a secret?

Here are some examples of agreements employees can be required to sign to keep important information confidential.

BP Handbook D
  • Noncompete agreements: seek to prevent former employees from going to work for the competition or from setting up a competing business.
  • Nondisclosure agreements: prohibit employees from revealing proprietary information during and after employment.
  • Nonsolicitation agreements: prevent employees from soliciting clients from your company.
3. What are some additional precautions employers can take to prevent proprietary information from falling into the wrong hands when employees leave their employ?

In today’s mobile workforce, an employee who works for you today may be working for your competition tomorrow. Take these precautions to prevent proprietary information from leaving with your employees:

  • Establish written policies that inform employees about the need for confidentiality and outline what information employees cannot disclose, as well as the penalties for violations.
  • Enforce policies regarding proprietary information and confidentiality consistently.
  • Use exit interviews to reinforce employees’ confidentiality obligations and remind them of the terms of any agreements signed.
  • Find out if the employee is going to work for a competitor, and write a letter advising the new employer of the employee’s confidentiality obligations.