Protecting Your Company's Most Valuable Assets: Confidential Information in the Workplace

The theft of company trade secrets, customer lists, marketing data, and other confidential information is both common and devastating. These assets are your company's crown jewels, and safeguarding them is crucial. While complete protection may be challenging, implementing the right policies, practices, and agreements can deter potential breaches and strengthen your position should legal action become necessary.

The loss of company information is estimated to cost the U.S. economy hundreds of billions annually. Employees who disclose confidential information to competitors or use it to start their own businesses gain an unfair advantage. Commonly misappropriated items include customer lists, bid proposals, manufacturing secrets, profit margin charts, and pricing sheets. If your employees have access to critical information, it's essential to consider confidentiality policies or nondisclosure agreements (NDAs).

Understanding the Risks in Any Work Environment

In today's digital age, the risk of information theft extends further than ever before. Employees can easily copy valuable company information using smartphones, upload proprietary data to cloud storage, or even print sensitive documents. With the proliferation of digital tools, confidential information can be misused with alarming ease. A strong technology security team can help detect and prevent these tactics by implementing robust safeguards.

Even with comprehensive measures in place, not every instance of employee theft can be prevented. However, intercepting just one instance of theft or misappropriation can save your company from significant harm and serve as a deterrent to others.

Practical Steps to Prevent Employee Theft

1. Establish the Right Policies and Practices

Having appropriate policies and practices is essential for any company handling confidential information. This is especially true if your company deals with sensitive information like health records, bank accounts, or social security numbers. Failing to secure these records can lead to major data breach incidents.

• Identify and Protect: Work with your technology team and legal counsel to identify key information that needs protection and determine how to secure it without hindering operations. Consider who should have restricted access and implement a zero-trust environment where employees only access necessary files.

• Audit Public Content: Regularly review your website, advertisements, and social media to ensure confidential information isn’t inadvertently disclosed. Publicly shared customer lists, for example, cannot be claimed as confidential.

• Develop Clear Policies: Incorporate clear policies within your employee handbook and employment contracts. Clear guidelines reduce excuses for confidentiality breaches and increase the likelihood of favorable court rulings if litigation arises.

2. Utilize Nondisclosure and Information Security Agreements

NDAs are effective tools for safeguarding critical information. While they shouldn't be overused, they are vital for employees handling sensitive data where disclosure could cause substantial harm. Information security agreements can also be valuable, outlining specific rules for using company technology. These agreements can be standalone or integrated into login procedures, requiring employee acknowledgment each time they access company systems.

3. Investigate and Enforce

Act decisively against any breach of confidentiality. Collaborate with your technology team and legal advisors to conduct thorough investigations. If necessary, engage third-party forensic experts. Taking a firm stance against breaches sets a precedent that discourages further infractions.

Legal action may be necessary if an investigation confirms theft of confidential information. Without enforcement, a company risks setting a precedent where trade secrets are unprotected, potentially leading courts to view non-action as a waiver of rights. Fortunately, clear policies and agreements often lead to swift settlements, as former employees caught in wrongdoing are typically eager to resolve disputes.

Conclusion

Regardless of your industry, your employees likely have access to confidential information that is critical to your competitive edge. Protecting this information is paramount, beginning with effective security measures and clear communication of expectations. Labeling something "confidential" is insufficient—actions speak louder than words.

It's also crucial to ensure that employees recruited from competitors understand that using confidential data from former employers is unacceptable. If an employee engages in such behavior, termination may be necessary. An employee willing to steal from a past employer is likely to do the same to you.