New Federal Trade Secrets Act compels changes to standard confidentiality text in all employee/contractor agreements
This past week, President Obama sign the Defend Trade Secrets Act of 2016. Most lawyers are unaware that the Act necessitates changes to all employee and contractor confidentiality agreements if the enhanced remedies available under the Act are to be preserved.
By way of background, the new law confers immunity from trade secret misappropriation for disclosures to attorneys or government agencies, or in certain court proceedings, in connection with suspected violations of law. More importantly, however, is that employers are now required to provide written notice to employees -- and agents and contractors performing work for the employer are included in the definition of "employees" -- of this immunity "in any contract or agreement ... that governs the use of a trade secret or other confidential information." Failure to provide such notice means that the employer/hiring party is barred from recovering exemplary damages and attorney fees in any action against such employee or agent, remedies which are otherwise available under the new Act.