USA Trends and Developments Contributed by: Christina Hynes Mesco, Chad Ayers, Kristen Prinz and Amit Bindra, The Prinz Law Firm
recent Administrative Law Judge (ALJ) ruling apply - ing the new standard provides some guidance. In Costco Wholesale Corp. , JD-38-35, 10-CA-316194, the ALJ for the NLRB reviewed an acknowledgement form that Costco required employees to sign during an investigation that prohibited them from recording investigation interviews without consent and required confidentiality during ongoing investigations. The ALJ found that the confidentiality provisions were over - broad and had a reasonable tendency to chill employ - ees’ Section 7 rights and rejected Costco’s argument that the provisions were necessary to protect the integrity of the investigation. Confidentiality in workplace investigation interviews is generally necessary to ensure the integrity of the investigative process, but current NLRB decisions have heightened the risks to employers when such restrictions are put in place. It is currently recom - mended that employers not require blanket confiden - tiality, even if only during the scope of an investigation. Instead, confidentiality provisions should be narrow and limited in scope and duration. If employers are concerned about confidentiality generally, it is best to explain to individuals involved in the investigation the importance of confidentiality to the integrity of the investigation and to request such confidentiality, with - out broadly requiring it. Employers should also stay up to date on decisions by the NLRB as guidelines frequently shift. Restrictive Covenants, Confidential Documents and Trade Secrets Privacy and confidentiality concerns do not only con - cern the integrity of an investigation, but more broadly, the ability of an organisation to protect its own propri - etary information and to reduce unfair competition for its products or services in the marketplace. Workplace investigators may encounter complaints or concerns related to violations of restrictive covenants, breaches of confidentiality or even theft of trade secrets, and should be equipped to handle them with understand - ing, timeliness and proficiency. Restrictive covenants often include non-competition agreements, which bar an employee from becom - ing employed by a rival in the marketplace, or non- solicitation agreements, which disallow asking clients
of a former employer for business or attempting to induce employees away from that employer. “Confi - dential information” is often defined broadly in most contracts, and can refer to any knowledge, documen - tation or other data that an organisation has deemed sensitive and attempts to protect from dissemination. A “trade secret” is a special subcategory of confiden - tial information. While there are statutory definitions of a “trade secret” under the federal Defend Trade Secrets Act and under various state laws, it is essen - tially information that an organisation has reasonably attempted to keep secret and which could provide economic value once it is known or obtained. It is often crucial to an organisation’s particular product or service or some other key aspect of the business and is usually considered a company’s “secret sauce” or “playbook”. The law regarding restrictive covenants and trade secrets is evolving at a breakneck pace, and laws also differ by state. Organisations and their counsel should continuously monitor both relevant legislative changes and new legal decisions. Preventive measures Organisations can institute preventive and protective steps to protect their proprietary information and to limit the risk of restrictive covenant or trade secret litigation. Appropriate measures should be tailored based on an organisation’s industry, business needs and the applicable law. Key measures include the fol - lowing: • routinely revise employment agreements so that employee obligations are clear; • have a written agreement indicating that employ - ees using a company device consent that they do not have a right to privacy in their use of those devices; • conduct trainings for employees on employment policies and their obligations under employment agreements, employment handbooks, etc; • review restrictive covenants during onboarding to ensure a potential new hire is not bound by prior covenants that could ensnare the new employer in litigation;
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