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An industry leading company doesn’t win because of its better product or service. Sometimes, it’s a trade secret that gives the competitive edge. Coca-Cola has one of the most famous trade secrets by protecting its recipe for over 130 years. To protect trade secrets effectively, business owners need to understand what the law allows and where it draws the line. A well-drafted employment contract can give you meaningful protection where it counts.
A trade secret is business information that gives the company a competitive advantage in its industry. It can be almost anything, such as patterns, plans, programs, devices, formulas, designs, prototypes, methods, techniques, or procedures. The trade secret could relate to any area of the business’s operations, such as finance, science, engineering, technology, or marketing.
There are two criteria that a trade secret must meet for it to qualify under the Uniform Trade Secrets Act (UTSA). It must be valuable because of its secrecy. The company must gain financial value from keeping the information a secret. Generally, this is shown when the company demonstrates its competitive advantage by having the information that others do not. The second requirement is that the company took reasonable steps to maintain the secrecy. If the business didn’t act as if the information were confidential or secret, they can’t expect the court to treat it as such.
Strong employment agreements do more than outline job responsibilities. They create clear boundaries around how sensitive information is handled during and after employment. To safeguard trade secrets effectively, your contracts need to include specific provisions that define expectations and give you enforceable rights if those expectations are violated. The following clauses form the foundation of a well-structured agreement.
A well-drafted confidentiality agreement sets the tone for how information is handled from day one. Instead of relying on generic definitions, the agreement should identify the types of information that matter most to your business, such as customer data, pricing strategies, or internal processes. Broad, catch-all language can create problems if it appears unreasonable or unclear. Clear obligations should also extend beyond employment, reinforcing that confidentiality is an ongoing responsibility.
A standard practice for employment contracts is to include a non-solicitation clause. It prevents former employees from approaching customers or current employees and soliciting them to leave the business. For the company, it protects them from former employees poaching current customers and employees. Generally, courts require this clause to be narrowly tailored for it to be enforceable. There needs to be a balance between protecting the business and allowing the former employee to support themselves in their career.
Companies need to plan for the long term. While everyone wants to stay with a company for the length of their career, this doesn’t always happen. Employment contacts need to plan for the possibility that an employee will eventually leave. To do this, include provisions for the return of equipment, devices, digital files, and documents.
An injunctive order is when the court orders someone to perform an action or cease performing one. This type of relief helps prevent further harm. It’s also useful when monetary damages alone aren't enough to fix the harm being caused.
To continue to protect sensitive information long-term, a survival clause is necessary. It obligates the employee to maintain confidentiality after their employment ends.
While having well-drafted employment contracts is a strong start, it isn’t enough. Business owners can take practical steps to protect their trade secrets. The first step is limiting employee access to sensitive information. Evaluate the information each employee needs to access to be able to successfully perform their role. Implement protocols for approving access requests with role-based permissions.
Train employees about the importance of following confidentiality rules. Explain why certain procedures are in place. Outline the potential consequences of failing to follow security procedures and causing a data leak. Clearly label all sensitive information so there is no mistaking what information needs to be protected. This could be in paper form, in emails, and on digital files.
Business owners in Washington, DC, benefit from overlapping layers of legal protection for trade secrets. The Defend Trade Secrets Act (DTSA) creates a federal cause of action. It gives companies access to federal courts and broader enforcement tools. At the same time, the District of Columbia Uniform Trade Secrets Act (DUTSA) governs claims at the local level.
Business owners should avoid common mistakes that weaken their trade secret protection. One of the most common mistakes is using overly broad language in employment contracts. This is often done with the mistaken belief that broad language provides the most protection. However, courts often find generic, broad language unreasonable. Tailored language shows that you took a thoughtful approach.
If you cannot clearly point to what you are trying to protect, it becomes much harder to argue that it qualifies as a trade secret. Courts look for identifiable information with real business value, not general claims that “everything” is confidential. Without that clarity, your protections lose credibility and may not hold up in a dispute. Labeling everything as confidential doesn’t strengthen your protections. In practice, it does the opposite. By claiming everything is confidential, there is no distinction between truly sensitive information and routine business information. The court views this approach as overly restrictive.
Even if a company has a solid contract, it loses its value if the terms aren’t consistently enforced. A business can’t ignore some employees’ contract violations and enforce others. Consistent enforcement shows the court you take your trade protections seriously.
Your trade secrets are part of what makes your business competitive, and they deserve more than informal protections or outdated agreements. By using clear, enforceable employment contracts and consistent internal practices, you can reduce risk and maintain control over sensitive information. The employment attorney team at Crowley So, LLP works with business owners to draft and update employment agreements that protect what matters most while staying compliant with state law. Reach out to one of our experienced employment lawyers today to make sure your contracts are doing the job you need them to do.
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