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New Trade Secrets Law Requires Certain Disclosures

Employers should be aware that on May 11, 2016, President Obama signed the Defend Trade Secrets Act (DTSA) into law (modifying 18 U.S.C. §§ 1831, et seq.)  The provisions of the DTSA became effective immediately, but only apply to a misappropriation of trade secrets occurring on or after the DTSA’s effective date.

Many states, such as Indiana, have already adopted some version of the Uniform Trade Secrets Act (see Ind. Code § 24-2-3-1, et seq.), but the DTSA includes some new provisions and requirements not previously seen. Chief among these is a new immunity notice requirement. Specifically, the DTSA requires that employers provide notice of the immunity and retaliation provisions (a “Notice”) of the DTSA to employees, consultants, and independent contractors in any contract or agreement with the employee/consultant/contractor entered into after May 11, 2016, that governs the use of trade secrets or other confidential information.  This broad language would appear to cover any number of employment-related agreements, including:

  1. Employment agreements;
  2. Independent contractor agreements;
  3. Consulting agreements;
  4. Separation and release of claims agreements;
  5. Severance agreements;
  6. Non-compete and non-solicitation agreements;
  7. Confidentiality and proprietary rights agreements; and
  8. Similar agreements included in employee handbooks (collectively, “Employment Agreements”).

The Notice can be achieved one of two ways: (1) an employer can include an immunity notice provision in all Employment Agreements signed after May 11, 2016; or (2) an employer can insert a cross-reference in all Employment Agreements to an employer’s policy document that includes procedures for reporting suspected violations of the DTSA (such as a whistleblower policy), so long as the policy includes the Notice information required by the DTSA. Option (1) is the more direct approach; and many employers may not have a whistleblower policy in place, which makes Option (2) problematic.  If an employer does have such a policy in place, however, and elects to provide the required Notice via Option (2), it is critical that the employer actually provide the employee, contractor, or consultant with a copy of that policy.

For a compliance review and advice concerning the appropriate provisions for your current Employment Agreements, please contact attorney Steve Theising at stheising@KDDK.com or (812) 423-3183, or contact any member of the KDDK Business Law or KDDK Labor and Employment Law practice team.

About the Author

Steven M. Theising, Indiana Attorney

Steve Theising

Steven M. Theising, an attorney at Kahn, Dees, Donovan & Kahn, LLP (KDDK), in Evansville, Indiana, practices primarily in the areas of business, real estate, tax and employee benefits, construction, and healthcare law. Steve utilizes his accounting and financial background to provide both legal and practical business analysis in negotiating, resolving and closing business, construction and real estate transactions and disputes. He also assists clients with addressing and resolving estate planning issues.

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