As a business leader, you might hope that you can trust your employees to respect the company both during and after their period of service. Employees have access to the secrets and resources of the business, after all.
Fidelity Brokerage Services has found itself in a difficult situation with a former broker. Although the broker left the company last December, he did not leave everything behind. Namely, Fidelity alleges that the broker contacted several of his previous clients, persuading them to switch from Fidelity to his new employer, Merril Lynch.
It is unclear why the broker decided to solicit these clients. Whether he was upset with Fidelity or he wanted success at Merril Lynch, he now faces a lawsuit. In this lawsuit, Fidelity requests that the broker returns any documents he kept from his old job and that he ceases to contact their clients.
The main basis for this lawsuit is the use of trade secrets. A list of clients, whether in memory or documented, can count as a business’ confidential information. Even former employees might not have the right to act on this information while at their new jobs.
A client list isn’t the only type of trade secret, either. Depending on your operation, you might have various forms of confidential information to protect. You may have a successful process, secret formula, technological advancement, data sets or specialized knowledge. Although workers should learn from every role they have, some of these trade secrets are crucial to your company’s competitive edge.
In order to stop or sue former employees who take advantage of trade secrets, your company must first create a legal obligation. This usually takes the form of a noncompetition or nonsolicitation agreement. When your employees first join your company, they will then sign the contract and agree to protect the company’s secrets – even once they leave their job.