Disclosing trade secrets during a job interview

Dear Mary,

I own a local bakery and I need to hire a cake designer. I’m worried that during the interviews, I’ll have to explain my top-secret cake making methods, and candidates could use that information to start their own bakery, or take a job with a competitor. Confidentiality is really important in my work and I need to know that applicants can keep things private. What can I ask during interviews? How do I talk about my company and still protect my confidential information?

The easiest way to protect trade secrets is with nondisclosure agreements (also known as confidentiality agreements).

During the interview process, a company must often disclose confidential information. An employer may protect the company’s information by requiring applicants to agree in writing that any information disclosed during the interview must be kept confidential.

You must give the applicant the opportunity to read the agreement and consult with counsel. You can’t make them sign it without having a chance to review it. You should also review the confidentiality agreement with the applicant to make sure they understand its terms.

A good way to put this into practice is to include the confidentiality agreement with your application. When an application is submitted, explain your confidentiality policy before you schedule an interview.

An employee interview is the perfect time to explain the importance your company places on protecting confidential information. Explain now what your protective policies are and how you protect third party confidential information.

It’s also helpful to pay attention to the applicant’s attitude about their former employer’s confidential information: If they reveal things that they probably shouldn’t, you know that your confidential information will be treated no differently.

Ask the applicant if they had a nondisclosure agreement with their previous employer. The last thing you want to do is misappropriate another company’s protected trade secrets.

You should also instruct the applicant not to reveal any trade secrets during the interview process or anytime thereafter. If an applicant previously worked for a competitor bakery, do not ask them for their fabulous secret carrot cake recipe, or you could be facing a not-so-sweet lawsuit.

If the applicant displays a willingness to disclose the trade secrets of their former employer, then the former employer may obtain an injunction to keep you from hiring them. The mere intent to disclose trade secrets is considered an actionable threat of trade secret misappropriation.

When you’re hiring new employees, you should really look into whether or not the position might require the inevitable disclosure of trade secrets. If it does, you should consider placing the employee in a position not requiring such disclosure (at least temporarily).

Nondisclosure agreements should be specific about what you want to protect. If your agreement would prohibit an employee from ever owning a bakery, it’s not going to hold up. However, if your agreement specifically cites a recipe or method that you have protected (not just an ordinary recipe to which anyone has access), employees may be forced to use reasonable efforts to protect that confidential information.

Mary Hudson is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached at mary@hudsonluros.com or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.