Illinois Manufacturers’ Association Update – September Breakfast Briefing

IMAProtecting Your Business: Best Practices for Incoming, Current and Departing Employees

The IMA September Breakfast Briefing provided an excellent overview of the issues involved with unfair competition agreements (e.g., non-compete agreements) and protection of trade secrets. Dan Kaufman and Chris Parker of the law firm Michael Best & Friedrich, LLP presented on these timely topics.

Some of the key takeaways from the session include the following:

  • Unfair competition agreements are generally covered by state law and it is important for companies to specify which state’s law will govern when having employees sign such agreements, as some states are more favorable than others as far as enforcement.
  • Unfair competition agreements should be written as narrowly as possible as this will make enforcement more likely. If an agreement is too broad, the courts may rule that it is unenforceable.
  • It is best practice to have an employee sign a non-compete or similar agreement at the time of employment. Historically, courts have considered the fact of employment as the “compensation” to the employee for signing the non-compete (i.e., and relinquishing rights) and this makes the agreement more likely to be enforced.
  • Employers must make “reasonable efforts” to maintain and protect the secrecy of their trade secrets. Use a cost/benefit approach when making decisions in this area.
  • When bringing on new employees, it is impossible to be too blunt with regard to expectations about confidential or proprietary information the new employee may have had access to at their previous employer. The message is simple – LEAVE IT ALL BEHIND.

The message was clear – do things the right way from the start and you can put yourself in the best possible position to protect your trade secrets and prevent unfair competition.

Brian Davidson

My specialization is in the areas of assurance services, fraud risk management, and forensic accounting. I am energized by bringing insight to customers regarding their business and assisting customers in identifying and addressing significant business risks. I am also passionate about the truth and being an advocate for accuracy and integrity in financial reporting. http://www.cdhcpa.com
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