In the wake of recent court rulings and state laws restricting the enforceability of noncompete agreements, many employers are searching for new ways to safeguard their trade secrets and competitive edge. Leading California employer defense attorneys at Lerner & Weiss say that while noncompetes may be losing favor, companies still have various powerful legal tools.
“Noncompete clauses have traditionally been a go-to for employers looking to prevent workers from jumping ship to a competitor. But with the changing legal landscape, businesses need to start thinking more broadly about protecting their assets,” says senior partner Leonard Lerner. “Fortunately, there are strong alternative strategies available.”
Based in Los Angeles, Lerner & Weiss has decades of experience advising California employers on defending their business interests. According to the firm, some key options that companies should leverage include:
Trade Secret Laws
“Even without a noncompete, trade secret laws provide robust protection against employees or former employees misappropriating confidential information like client lists, formulas, designs, etc.,” explains partner Michael Weiss. Both federal and state laws, such as the Defend Trade Secrets Act and the California Uniform Trade Secrets Act, allow employers to sue for injunctive relief, damages, and attorney’s fees when trade secrets are improperly taken or disclosed.
Nondisclosure Agreements (NDAs)
While an NDA can’t stop a worker from leaving to work for a competitor, it can prohibit them from revealing confidential business information. “A well-crafted NDA defines what the company considers proprietary information and obliges the employee to keep that information strictly confidential, both during employment and afterward. This gives you grounds for legal action if the agreement is violated,” says Lerner.
Nonsolicitation Agreements
According to Lerner & Weiss, broader noncompetes may not stand up in court, but more limited nonsolicitation clauses are often permissible. These can prevent an employee from poaching clients or coworkers when leaving for a competitor. However, she cautions that nonsolicits must be reasonably limited in scope and duration to be enforceable.
Invention Assignment Agreements
For companies with value in intellectual property and innovation, invention agreements are crucial. These agreements specify that inventions, designs, and ideas generated by employees within the scope of their work are the sole property of the employer. “Without an invention agreement in place, a star engineer could potentially walk away with patent rights to a product they helped develop, so it’s critical to lock that down,” warns Lerner.
Patent, Copyright & Trademark Protection
Businesses should also take full advantage of patent, copyright, and trademark rights to protect their creative assets from poaching by competitors. “If you develop a unique product, process, or brand identity, you want to stake your ownership claim and be ready to defend it,” advises Weiss. Securing intellectual property rights creates strong legal recourse if others attempt to copy or profit off your ideas and innovations.
Of course, the attorneys note that the best defense is a good offense. Taking proactive steps to foster employee loyalty, such as competitive pay and benefits, opportunities for growth, and positive work culture, makes valued workers less likely to defect to a competitor in the first place. Prudent information management, like restricting access to sensitive data and requiring strong cybersecurity practices, is also key.
When litigation is necessary, however, the employer defense lawyers at Lerner & Weiss are ready to advocate for their clients aggressively. “Our attorneys have a track record of securing injunctions, judgments, and sizeable damages awards against parties who violate nondisclosure agreements, misappropriate trade secrets, or infringe on intellectual property rights,” says Lerner. “We know how to wield all the legal tools in the toolbox to safeguard our client’s business assets and interests.”
While the national trend against noncompetes presents new challenges for employers, companies that creatively embrace alternative legal strategies will be well-positioned to protect the innovations, information, and talent at the core of their success. With the help of experienced employer defense counsel like the team at Lerner & Weiss, businesses can design a robust, multifaceted plan to shield their essential assets and emerge strong amid shifting legal winds.
