Protecting Your Trade Secrets Before, During and After a Workforce Reduction

According to the latest news, jobs have dropped by another 95,000 in the past month and unemployment continues to hover at 9.6%.  In short, things do not appear to be improving and it is likely that we will continue to see workforce reductions until they do.

I ran across this article today (top item), which reports that a former Bank of America Corp. computer programmer has been accused in a lawsuit by the bank of stealing 21 confidential files the day before he was to be fired as part of a 400 employee workforce reduction.  Bank of America is seeking a court order requiring the employee to return the files, plus unspecified damages. The files apparently included profit-and-loss figures, current securities trading positions and company risk assessments.  Bank of America discovered the theft through a security review of large files sent by employees to e-mail addresses outside the company.

This story has a couple of lessons.  First, companies need to be pro-active about protecting their trade secrets rather than simply relying on policies.  Bank of America had security procedures in place that worked – do you?  In my experience, employees who lose their jobs involuntarily are much more likely to try to harm their former employer in some way to gain an advantage for themselves.  If you are planning a workforce reduction in this economy, protection of trade secrets should be a priority.  Consider the following:

Before:

  • Make sure policies are up to date and adequately protect trade secrets;
  • Audit personnel files to ensure that employees have signed confidentiality and non-compete agreements in place;
  • Ensure that you have taken adequate steps to protect trade secrets by limiting access to documents, including electronic access;
  • Conduct periodic training to remind employees of their obligations;
  • Develop security procedures to ensure that documents cannot be removed without authorization – work with your information technology department to set up electronic monitoring and protections;
  • Consider banning the use of all USB devices on company computers;

During:

  • Step up monitoring and other security procedures to ensure that confidential information cannot be removed;
  • Promptly recover keys from terminated employees and lock out passwords and other access to computer systems;
  • Promptly recover all company electronics capable of storing data, e.g. laptops, PDAs and telephones;
  • Supervise the removal of personal items by terminated employees;
  • Conduct exit interviews during which employees should be reminded of on-going obligations;
  • Provide employees with copies of agreements governing post-employment conduct;

After:

  • Continue monitoring for a period of time to ensure that terminated employees do not attempt to access company systems or persuade former co-workers to provide access or documents;
  • Aggressively pursue any breaches of restrictive covenants.

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