As we previously reported, On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (“DTSA”) which creates a federal civil cause of action for trade secret theft and provides protection for certain “whistleblower” employees, and obligates employers to notify their workers of these protections. For example, an employee who discloses a trade secret “solely for the purpose of reporting or investigating a suspected violation of law” would be protected from liability.
The DTSA requires employers to inform their employees of the various immunities available under the new law. Failure to do so could deprive the employer of any right to punitive damages or attorneys’ fees in an action against that employee. “Employee” is defined broadly under the act, and sweeps in contractors and consultants. This notice requirement requires companies to review and standardize their confidentiality, hiring and consulting agreements with an eye toward spelling out responsibilities regarding trade secret information. Work with a knowledgeable trade secret and employment attorney to craft the required confidentiality notices.