HR Strategy Group, LLC Newsletter

Employment Agreement: a legal agreement in which the employer agrees to employ an employee and outlines the employee's duties, duration of employment, compensation, nondisclosure agreement and option to terminate. Employment agreements are NOT required by law, although some employers and employees believe that they need to have an employment agreement in place to protect business interests.
Non-Compete Agreement: a legal agreement in which one party (usually an employee) agrees not to pursue a similar profession or trade in competition against another party (usually the employer). (from Wikipedia)
Non-Disclosure Agreement: a legal agreement in which the parties agree not to disclose information covered by the agreement. An NDA creates a contractual relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects non-public business information. (from Wikipedia)

Step 2 - How can a business protect its Intellectual Property with its employees?

Appropriate policies and procedures should be written, clarified, discussed, and distributed to all employees, to ensure that everyone takes necessary steps to preserve ALL sensitive, proprietary information. Employees should be given training about handling proprietary information. It is vital to have written policies in place - and included in your Employment Handbook, at a minimum.

For new hires, a Company should disclose the Company's Intellectual Property policies early in the hiring process and tell the prospective employee that the company expects that its proprietary information will be kept confidential, that it will not be shared with competitors and what consequences there may be if the employee breaches that policy. A new employee orientation is an ideal time for the company to have the new employee sign an employment agreement, non-disclosure, and/or non-compete agreement(s). On-going training is also highly recommended.

Step 3 - What is required for a Non-Disclosure Agreement or Non-Compete Agreement to be valid and enforceable?

If/when an employer uses an employment agreement, it should include a non-disclosure provision, a confidentiality provision, an assignment provision, and if relevant, a non-compete (aka "restrictive covenant") provision. It is in the confidentiality provision that the company defines the proprietary information that it must protect and where the employee promises to keep that information confidential and with the NDA, the employee promises that she will not disclose this information. The assignment provision requires all employees to assign any rights to any concept, idea, invention, trade secret or copyrightable work to the company.

The non-compete agreement can prevent a terminated employee from taking the company's proprietary information to a competitor. Non-compete and non-disclosure agreements must be carefully written since many courts construe them in favor of the employee.

In Maryland (and other states), for example, a non-disclosure and non-compete agreement must be:

a) Reasonable in terms of geographic scope and duration;

b) Reasonable in duration;

c) Reasonable in geographic scope;

d) Not cause undue hardship; and

e) Be in the public interest.

About Jim Bechtel, Principal, Intellectual Assets Consulting, LLC:
Jim runs Intellectual Assets Consulting, LLC (http://iacllc.biz/), a business that advises companies on value and protection and transfer of trade secrets, patents, trademarks, copyrights and other intellectual property and on Technology Transfer matters with the Federal Government. If your company needs guidance regarding general intellectual property and how you can protect your company's assets, please contact Jim Bechtel at 410-703-8482 or email jbb@iacllc.biz.

About Cheryl Brown, J.D., Vice President, HR Strategy Group, LLC
Cheryl provides employment law expertise to HR Strategy Group, LLC.

Her expertise includes drafting employment handbooks, employment agreements, and employee relations support for small business owners. Please contact Cheryl at 443-717-0989 or cheryl@hrstrategygroup.com.