sharing confidential information is a business risk

Sharing Confidential Information: Safeguarding Your Business’s Vital Information

In the course of their careers, employees often encounter and require access to sensitive information related to their employer’s business. This can range from client lists and prospective sales leads to unique intellectual property, such as secret recipes or proprietary business methodologies that give their employer a competitive edge.

Given the critical nature of confidential information, legal considerations have evolved to address potential breaches. Employees may face legal repercussions if they fail to safeguard confidential information or intentionally exploit it for personal gain.

This article explores the duty of employees to protect confidential information, the duration of this duty, and the consequences of breaching it.

Understanding Confidential Information

In a business context, confidential information encompasses any data unique to a business that could provide competitors with an advantage or be misused to harm the business if disclosed without authorization. Examples include client lists, pricing information, and intellectual property.

Employers can explicitly define confidential information in a Confidentiality Agreement or a confidentiality clause in an employment agreement. In cases of ambiguity, Ontario courts consider factors such as should the information be treated as confidential, value to the employer and the market, protective measures in place, and the ease of lawful acquisition.

It is essential to note that confidential information does not include general industry knowledge or skills required for job performance.

Duty Against Sharing Confidential Information

Employees generally have an implied duty to reasonably protect and refrain from sharing their employer’s confidential information during their employment. Upper management and executives may have heightened obligations even after leaving the company due to their access to more sensitive information.

Employers can reinforce these obligations through written Confidentiality Agreements, specifying the types of information considered confidential, the duration of the duty, and potential remedies for breaches.

Duration of Employee’s Duty

Departing employees may be surprised to discover continuing obligations to protect their former employer’s confidential information. Employers can remind employees in writing or through severance offers, emphasizing the importance of refraining from sharing confidential information.

Challenges may arise if an employee joins a competitor or starts a competing business, as utilizing skills learned at a previous company is acceptable, but sharing or using confidential information is not.

Consequences of Sharing Confidential Information

Sharing confidential information without authorization can be grounds for summary dismissal, potentially denying employees severance entitlements. Courts in Ontario increasingly view breach of confidentiality as just cause for termination, especially when personal benefits are derived from the misuse of confidential information.

Employers can pursue legal action against employees for breach of confidence, seeking damages, non-monetary orders, and legal costs. To succeed in such claims, employers must demonstrate that the information was confidential, communicated in confidence, and misused by the receiving party.

Before taking legal action, employers should conduct independent investigations, and both parties should seek legal advice to understand their rights and obligations.

Conclusion

Confidential information encompasses a range of data crucial to a business’s success. Employees bear a general obligation to protect this information, with the specifics depending on individual cases. Improperly sharing confidential information can lead to termination with cause and potential legal consequences.

Employment lawyers can provide guidance in advising both employers and employees on legal rights, obligations, and available options. They play a crucial role in helping parties navigate legal processes, protect themselves, and achieve desired outcomes.

Related Topics

What Qualifies As A Breach Of Confidentiality?

Fiduciary Duty: Employee Responsibilities To A Workplace

Non-Competition & Non-Solicitation Clauses

Avoiding Fiduciary Duty Breaches With Due Diligence

Contact Achkar Law

If you are worried about a potential breach of confidentiality in your business, do not hesitate to reach out to Achkar Law. Our experienced team is ready to address your concerns, answer questions, and provide guidance on safeguarding your information. Protect your business from the risks of breach of confidentiality—contact us today.

Contact us by phone toll-free at 1 (800) 771-7882 or email us at [email protected].