When Are You Not Allowed to Share Confidential Information?achkarlaw-admin
Throughout their career, an employee will likely be exposed to or require access to sensitive information relating to their employer’s business. Examples can include everything from simple spreadsheets listing all a business’ clients to a unique piece of intellectual property, like a secret recipe or way of doing business that gives their employer some competitive edge in the market.
Given the sensitive nature of confidential information, a lot of law has developed on the subject. Most commonly employees find themselves at risk of a lawsuit because they failed to keep confidential information private, or purposefully used their employer’s information for personal gain.
The article below will discuss when there is a duty for employees to protect confidential information, how long this duty lasts, and what happens if that duty is breached.
What is Confidential Information?
Confidential information in the business context includes any information unique to a business that could give its competitors an advantage or has the potential to be misused to damage the business if disclosed without authorization to a thirty-party. Non-exhaustive examples of confidential information include:
- Prospective sales leads;
- Client lists;
- Supplier lists;
- Personal information;
- Contact information;
- Employee information and records;
- Data stored on computers;
- Pricing information;
- Security-related information, like usernames and passwords;
- Financial strategies and information; and
- Marketing strategies and information.
Employers can explicitly identify what is considered confidential information in a Confidentiality Agreement or a confidentiality clause in an employment agreement. Where there is confusion about whether a particular piece of information is confidential in nature, courts in Ontario commonly consider the following non-exhaustive factors:
- The extent to which the information is known to other employees and other businesses;
- The value of the information to the employer and within the market, with information pertaining to the development of products and intellectual property like “secret recipes” more likely being considered confidential information;
- The measures an employer takes to prevent an employee or other businesses from accessing the relevant information; and
- How easily the information could be lawfully acquired or duplicated by those outside an employer’s business.
Confidential information does not include the general knowledge and skills an employee needs to perform their duties. It also does not usually include information that is commonly available in a given industry or market. For example, using a search engine to find addresses of businesses to contact for marketing is not in itself a piece of confidential information.
When is there a Duty Against Sharing Confidential Information?
Employees generally owe an implied duty to reasonably protect and avoid sharing their employer’s confidential information while they are an employee. The nature, scope, and other details of this implied duty will depend on the unique facts of each case.
Upper management and executives for a company particularly have implied obligations to protect and avoid sharing a company’s confidential information even after they depart their workplace. The need for this greater duty is based on the general commercial reality that management employees have access to more confidential information that can do greater harm to the company’s business and affairs even after they leave.
Employers can require their employees to sign a written Confidentiality Agreement to further protect their business interests. This document can solidify an employee’s implied duties and expand on them to specify what kinds of information are considered confidential, the duration of their duty to protect confidential information, and what remedies an employer can use to protect their interests related to the confidential information against an employee.
How Long Does an Employee’s Duty Against Sharing Confidential Information Last?
Departing employees may be surprised to learn they might owe continuing obligations to their former employers even after leaving the company. One such duty is to protect and avoid sharing any confidential information the employee obtained from their former employer.
Employers should remind employees of their continuing obligations to refrain from sharing confidential information and to ensure confidential information remains with the company where there are physical copies. Employers may do so in writing to the departing employee, or make an offer of severance that includes terms that expressly require the employee to acknowledge it will refrain from sharing any of the employer’s confidential information following their departure.
Issues can arise when an employee then becomes employed by a competitor or starts their own business to compete with their employer. Although there is nothing preventing employees from utilizing skills they learned at a prior company, new employees cannot share or use confidential information from their previous employer to their own benefit.
What Can Happen if You Share Confidential Information?
Regardless of whether there is a written Confidentiality Agreement or a confidentiality clause in an employment agreement, sharing confidential information acquired during one’s employment without an employer’s authorization can be just cause for summary dismissal. This could be used to deny an employee their severance entitlements upon termination.
While “just cause” is usually a high standard to meet, courts in Ontario have increasingly held the breach of confidentiality to be just cause for termination. This is especially the case when the employee had access to confidential information as management and derived a personal benefit from the situation.
An employer can sue an employee for breach of confidence for sharing confidential information to others without authorization. This can result in a claim for significant damages, non-monetary orders to prevent further sharing of relevant confidential information, and legal costs against the employee.
To succeed on a claim for breach of confidence against an employee, an employer must show:
- The information conveyed was confidential;
- That it was communicated in confidence; and
- That it was misused by the party to whom it was communicated.
A common example of a successful breach of confidence claim occurs when a management employee shares information with a competitor for personal benefit and to the detriment of their employer’s business.
Employers should always conduct an independent investigation before taking disciplinary or legal action against an employee. It is always the best practice for both employers and employees to seek legal advice if they have questions about their legal obligations, entitlements, and available legal options.
Confidential information can include a variety of information that could grant a business’ competitors an advantage or otherwise cause a company harm if shared without authorization. Employees have a general obligation to protect and avoid sharing a business’s confidential information, but the length of that obligation and other details will depend on the facts of each individual case.
If an employee improperly shares a company’s confidential information, an employer may have the legal right to terminate their employment with cause, and potentially sue the employee for breach of confidence. This could result in significant damages and legal costs for the employee.
An employment lawyer has the required expertise to advise both employers and employees about their legal rights and obligations respecting confidential information. They can also assist employers and employees take proactive steps to protect themselves, negotiate a settlement of their legal disputes, and navigate the appropriate legal process to achieve their desired results.
If you are an employer or an employee with questions about the sharing of confidential information or need assistance with a workplace dispute relating to sharing confidential information, our team of experienced workplace lawyers at Achkar Law can help. Contact us by phone toll-free at 1 (800) 771-7882 or email us at [email protected], and we will be happy to assist.
If you are a small or medium-sized company looking for full-service support with a same-day response, visit our CLO Program page for our strategic solutions.