Client Alert — Confidentiality Agreements and Handbook Policies Must Be Revised

June 01, 2016

President Obama has signed the Defend Trade Secrets Act (DTSA). Under the DTSA, an individual will not be held criminally or civilly liable for the disclosure of a trade secret or other confidential information that is made (1) to a government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

Additionally, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court order. The DTSA requires employers to provide notice of the above-referenced immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. An employer shall be considered to be in compliance with the notice requirement if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.

Employers must revise all non-disclosure/confidentiality and separation agreements, effective May 11, 2016, that govern the use of trade secrets or confidential information to inform employees who sign the agreements of the immunity provisions. Employers must also revise policies regarding confidential information and trade secrets to provide similar immunity language.