CONFIDENTIALITY PROVISIONS IN EMPLOYMENT CONTRACTS

BY G. A. FINCH

Confidentiality provisions in employment contracts have become pretty standard. Because of the boom in technology in the last three decades, there are a lot more intellectual property and proprietary information to be protected.

Neither the employer nor the employee should underestimate the utility of confidentiality and non-disclosure provisions. Proprietary business information is a critical, but underappreciated, asset of many companies. For example, in Illinois, the Trade Secrets Act protects a company’s information that is treated as secret and has economic value because it is not generally known to other persons. This information includes technical or nontechnical data, a formula, a pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers. A confidentiality agreement protects the employer’s trade secrets and informs the employee what information is permissible for him to utilize post-employment.

The employee should understand at the time of signing an agreement that much of the intellectual capital and information he or she creates for the company may not go along with him or her when he or she leaves the company. Where the employee has been developing an idea or invention prior to being offered a position with a new employer, he or she should specifically carve out that idea or invention from the confidentiality agreement.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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