Dobbeck: Policies to protect your company's secrets

If your company is like many others, you may be concerned about disclosure of confidential information including processes, customer lists and procedures. Smaller companies may believe that disclosure of company secrets only concerns larger firms – but think again. In this time of shortened hours and a limited backlog, your employees may be seeking a part-time job to supplement their income. If so, you will be well served to put policies in place to protect yourself.

There are several from which to choose, consider the following:

• Confidentiality agreement: A policy outlining what you consider to be confidential information and to whom this information can be disclosed. It may include customer files, blue prints, internal processes, vendor lists, financials, etc. Because this is considered a legal and binding agreement, an attorney should draft it. A policy also should be added to your employee handbook stating that confidential information should not be discussed with anyone outside the department or company. It should also give examples of information you consider to be confidential and require the employee to get approval from a supervisor or manager before discussing information with others.

• Payroll: Many employers include payroll information as "confidential" and discipline employees who discuss their payroll with other employees. However, in Illinois, employers cannot prevent or discipline an employee from discussing his/her own payroll information or payroll information of other employees. If your confidentiality policy includes payroll information, please reconsider. The Equal Pay Act that went into effect in 2003 is the governing law. Penalties for non-compliance increased on Jan. 1 to $5,000.

• Conflict-of-interest policy: This policy specifically addresses the employee’s right to work for a competitor. This is not to say that you can limit the employee from being engaged in the same line of work, only that he/she cannot work for a competitor, customer or vendor. In order to be sure that no conflict exists, you may ask that the employee check with a senior member of management before accepting a position elsewhere. The person who can best determine any potential conflicts should be the person who either approves or denies the request.

• Moonlighting: Make sure your policy does not interfere with or limit the employee’s off-duty ability to supplement his/her income. Instead, focus on the employee’s ability to safely and productively work for you. A second job or moonlighting policy should focus on the employee’s ability to come to work, on-time and every day that he/she is needed including fulfilling overtime and emergency-call requirements. It also should require that the employee is able to safely perform his/her duties. As stated above, you can prevent employees from working for a competitor, vendor or customer.

• Non-compete agreement: The courts have taken a very strict line in its use because if it is drafted too broadly, it will limit the individual’s ability to earn a living. Usually, the agreement can only last a year or two and must be very limited in area. Since a non-compete agreement is a legal and binding agreement, make sure that yours is drawn up by an attorney. It has a good chance of landing in court so it’s best to make sure it can be defended.

• Ownership of work product: A work product clause or policy can prevent an employee from taking ideas, products or other forms of work from you when he/she leaves. It can apply to inventions, work-holdings, and engineering capabilities as well as forms, documents, marketing strategies, etc. A work product policy can give you extra protection when the employee leaves. It is generally used for the engineering department, marketing and others whose primary responsibilities are creative in nature.

• Copiers, scanners and fax machines: A few years ago, CBS aired an exposé revealing how easy it is for identity thieves to gain confidential information about your business practices, clients, customers, vendors and employees. What many business owners don’t realize is that most electronic devices that copy and/or transmit documents contain a hard drive on which the copied information is stored. Unless the hard drive is scrubbed or removed, when the device is returned at the end of the lease or discarded, the information stored on it remains.

In the video, which can be accessed at, viewers learn how easy it is to download free software that enables anyone to retrieve the information on the device. Prints, plans, processes, Social Security numbers, birth dates, payroll, personal health information, customer lists, pricing structures, bidding information, etc. are all at risk of disclosure if not properly destroyed.

Since most business owners lease copiers, at the end of the lease, they are returned and then sold as used equipment. For as little as a few hundred dollars, an identity thief is able to purchase the device and download information.

To protect your company, make sure your equipment vendor has a system in place to scrub the hard drive. You may pay more for the service but in the long run, you will know your confidential information, along with confidential information about your employees and customers is protected. If they don’t offer such a service, check with your IT department or contract with an outside service that provides this service.

• Employee files: Many employment records need to be retained after termination; some for up to 10 years. When the retention period has expired, employers are required by law to destroy the file so that it is no longer accessible. This can be done by shredding, pulverizing or burning. Your policy should clearly state which method you use and also safeguards for electronically stored information.

Employers do have the ability to keep their company secrets and products safely away from competitors. Your HR department, consultant or attorney should be able to help you put policies and practices into place.

• If you need help in understanding or developing employment policies, contact Karla Dobbeck, president of Human Resource Techniques Inc. Call 847-289-4504, or email

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