Florida Adds "Financial Information" To List of Trade Secrets That Can Get You Tossed In Jail

Florida continues to be one of the worst states in the nation for employees. Zippo has passed so far in favor of employees this legislative session, but legislators thought, "Gee, Florida just isn't rotten enough for employees. Let's make it worse."

So they added the very broad category of "financial information" to the list of trade secrets that, if taken, can land employees in jail. What is financial information? Anything with numbers on it, including the office pool on Mary Lou's due date? Only banking and accounting documents? Who knows? Did the Republican legislature think to define it? Nope.

Still, in order to prove this crime, the prosecution will also have to prove that the information was:

1. Secret;
2. Of value;
3. For use or in use by the business; and
4. Of advantage to the business, or providing an opportunity to obtain an advantage, over those who do not know or use it when the owner thereof takes measures to prevent it from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.

So taking a post-it with "$1.00" written on is is probably not enough for a conviction, but when you're gathering up documents to prove how much you're owed in commissions or to prove discrimination, you need to be careful. Some poor schmo will be the first person to get the honor of testing the constitutionality of this very broad law. Don't let it be you.

Employers already had the remedy of injunction and money damages if employees took and used trade secrets to form their own company or help a competitor, so this seems like overkill. But there's nothing this legislature seems to think is too harsh to impose on Florida working folks.

Vote well, people. Vote well.

The Criminalization Of Employment Law

A new indictment in a trade secret case, where a former employee opened his own business, made me think about something that's been bothering me for awhile, namely, the criminalization of employment law. I did a piece about this a couple years ago called Your Ex-Boss Wants You In Jail. It's gotten worse. Not only are we sending employees to jail for what used to be civil offenses, but the criminalization is completely one-sided. Employees blink wrong, go to jail. Employers can't get tossed in the hoosegow no matter how bad they misbehave.

Here's what The Dallas Morning News says about the case:

The indictment states that Tezock was an employee of Voltaix for about 16 months until September 30, 2005, when he was scheduled to be let go from the company.

During the last month of his employment he was allowed to complete a project from home, working with proprietary company files on his personal computer. It was during this time that the district attorney’s office alleges Tezock made copies of a secret recipe for germane, a valuable chemical used in semiconductors and solar technology.

Speaking through an attorney, Tezock denied the charge that he had stolen plans to produce germane.

A letter released by Tezock’s legal counsel said that he had applied and was granted a patent for his method of germane production in 2009. According to Tezock, Voltaix’s response at that time was to try and re-hire him.

Daniel Therings, a former attorney for Metaloids, said that thereafter Voltaix brought a civil action against the company and Tezock in 2010. Court documents filed in Texas’ fifth district court of appeals show the company asked the court to stop Metoloids from producing germane.

While Therings said the case is still caught up in appeals, he said the court sided with Metaloids. A news brief on the company’s website said Voltaix was ordered to pay the cost of further litigation.

He got a patent for it, but it's their trade secret? Let's assume that this isn't as ridiculous as it sounds. So an employee who uses alleged trade secrets to open his own business is a criminal, despite antitrust laws saying competition is one of the biggest tenets of capitalism. Indeed you can look at all the arguments againstnoncompetes in Massachusetts to see why letting employees compete with former employers is a good thing. Okay, taking trade secrets is bad, if it really happened. So sue the employee for any damages. But a crime?

One employee was sentenced to four years in prison for trade secret violations. Another employee is sentenced to 97 months. There are trade secret convictions and more trade secret convictions.

Then there employees getting convicted for exceeding their authority to access information on computers at work. One guy was sentenced to 41 months under the Computer Fraud and Abuse Act and his sentence was finally reversed on appeal. CFAA prosecutions have been all the rage among employers seeking to toss employees in jail. Yet if you look at the civil cases on CFAA, you can see just how broad this law is and how much employees are at risk if they click the wrong link at work.

 Employers Skate

Then look at the employer side. No criminalization there. Despite attempts to criminalize wage theft, all we get are local ordinances and attempts by Republicans to make even the wage theft ordinances illegal. Wage theft is rampant, and it costs us all money. Several Florida counties have passed ordinances to beef up efforts to go after employers who steal employee wages. They should be throwing them in jail, but no, can’t do that. Heck, Broward County couldn't even use the term "wage theft" in its ordinance because employer groups threw a hissy fit.

Look at employers who violate antitrust laws, which have criminal penalties, by the way, by forcing low level employees who can’t affordto fight to sign noncompete agreements for the sole purpose of preventing competition. Are they being prosecuted for making employees virtual indentured servants? No way. What about eBay, Apple, Google and othersconspiring to violate antitrust laws with no-poach hiring agreements? Criminal prosecutions? Nope. Slap on the wrist.

Egypt just made sexual harassment a crime. We can’t even get federal laws passed making sexual harassment of unpaid interns illegal. That’s right. Our kids have no legal protection against sexual harassment anywhere but Oregon and NY.

Groping teenagers and young women? Not even a civil offense. Stealing employee wages? Not a crime. But starting a competing business against your former employer? That’s a jailing offense.

Seizing Employee Property?

Now employers want to pass a law allowing courts to seize the property of former employees who dare to compete. The Fourth Amendment be damned. How can you fight a case if you don't have the proof? You can't, and that's exactly what employers want. They can shut down employees who dare to compete without lifting a finger. Where's the outrage? Why isn't hell being raised at the prospect of this ridiculous new law?

This makes me mad as hell. Does it make you mad too? Then start raising hell with your legislators. Tell them to stop the one-sided criminalization of employment law. And tell them to say no to seizure of employee property for alleged trade secret violations.

Let's not give up employee rights so easily.

Your Ex-Boss Wants You In Jail

I’ve noticed a disturbing trend recently. Not only are former employers suing ex-minions, but they’re trying to have them tossed in jail. That’s right: quit and go to jail, especially if you go to work for a competitor. The criminalization of employment law shows just how hostile employer-employee relations have gotten.

Here are some laws your employer might try to prosecute you under:  

Computer Fraud and Abuse Act: This is a law that was geared to hackers. Basically, it says if you access a computer without authorization, or if you exceed your authorization, you can go to jail. An employer recently tried to claim that an employee who used his authorized access to download customer contact lists violated this law. Fortunately, the 9th Circuit said the law didn’t apply to misuse of information employees were authorized to obtain. He had to appeal twice, because the 9th Circuit originally ruled against him. Does that mean courts in other circuits won’t let your employer toss you in jail if you copy something they think you shouldn’t have when you leave? I wouldn’t bet my freedom on it.

The 9th Circuit pointed out that other circuits out there disagree: “We remain unpersuaded by the decisions of our sister circuits that interpret the CFAA broadly to cover violations of corporate computer use restrictions or violations of a duty of loyalty. See United States v. Rodriguez, 628 F.3d 1258 (11th Cir. 2010); United States v. John, 597 F.3d 263 (5th Cir. 2010); Int’l Airport Ctrs., LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006).”

Your employer wants to make violating your trade secret or confidential information agreement a crime.  

National Stolen Property and Economic Espionage Acts: A computer programmer found out the hard way after downloading the code he wrote for a program that employers are playing hardball. He was convicted under these two laws and had to appeal. The 2nd Circuit said the National Stolen Property Act didn’t apply to intellectual property. It also said the Economic Espionage Act didn’t apply to a product that wasn’t intended for sale, but was only for internal corporate use. Still, employers are successfully prosecuting former employees if they think trade secrets were stolen.

It’s bad enough that employers are making everyone from the janitor and receptionist to their top sales people sign noncompete agreements that limit their right to work for competitors. Most employees don’t have the resources to fight, so they end up out of their chosen field for 1 – 2 years. Now, they can face jail time too.

It cost these employees a boatload of money to defend themselves. Most employees couldn’t afford to fight. I wonder how many employees will end up in jail in other circuits because they couldn’t afford to fight.

Another concern is that employers will use the threat of criminal prosecution to chill whistleblowers from copying information about employer illegal activities. Whistleblowers have a tough enough time and take enough risk for their heroic efforts. They shouldn’t have to risk their freedom in order to bring down a criminal enterprise.

It’s time to urge legislators to make employment laws fair to employees. Nobody should be forced out of their profession or lose their freedom just because they don’t have enough money to fight a bully employer.

Donna’s Employment Law Predictions for 2012

I’m getting out my iPad’s magic 8-ball app and looking into the future. I see a big year for employment law issues in 2012. Here’s where I think we’ll see lots of litigation or legislation:

Military: With loads of returning military members, Congress will scramble to plug any new loopholes that keep military service people from being protected in their jobs. Look for lots of USERRA litigation when employers realize they don’t want to let the person who has been in the position go when Johnny comes marching home. Without a doubt.

Sexual harassment: Now that sexual harassment has become a hot-button political issue again, watch for attempts to weaken sexual harassment protections. Also watch the federal courts continue to erode what few protections employees have left. Will the Democrats have the will and the ability to stop sexual harassment from becoming legal? Very doubtful.

Retaliation: Retaliation has been hot, hot, hot, and it will continue to be so. Watch for attempts to weaken whistleblower laws, both legislative and judicial. While the courts have consistently enforced retaliation laws, they’ve been reluctant to rule in favor of employees in any situations where there was doubt about the legislative intent. For instance, the Fair Labor Standards Act doesn’t expressly prohibit employers from discriminating against potential employees who have sued former employers for overtime or unpaid wages. Watch for more courts to hold that the word “employees” doesn’t mean “potential employees.” Will there be a public outcry when potential employers refuse to hire people who demanded they be paid? My sources say no.

Bullying: No state will have the political willpower to pass anti-bullying laws, despite the growing evidence that bullying is more traumatic for employees than sexual harassment. It is decidedly so.

Tax relief: The Civil Rights Tax Relief Act will stall yet again, meaning that employment law settlements will continue to be taxed where personal injury cases aren’t. Try again later.

Unemployed: The unemployed will start to get some rights. More states will pass laws protecting the unemployed against discrimination. Employers will get more creative in denying them jobs by using credit checks and other excuses. Eventually, Congress will have to take action, but gridlock is likely in this election year. Outlook not so good.

Wage theft: As more employers decide the way to save money is to fail to pay employees or former employees, wage theft laws will begin to spread across the country. Maybe seeing a few deadbeat employers hauled off in handcuffs will be good for the economy. As I see it, yes.

Noncompete: Desperate employers trying to prevent employees from skipping to competitors who will treat them better and pay more money are using noncompete agreements as virtual indentured servitude. You’d think that elected officials would look at noncompete abuse and side with their constituents, but instead the trend is to give employers even more right to restrict competition. I predict more states will beef up employers’ ability to enforce noncompetes. The good news is that employees with resources will be using antitrust laws and the lack of legitimate interests to enforce to fight back. Noncompetes will continue to be the weapon of choice to bully former employees. Without a doubt.

Confidentiality and trade secrets: Agreements where employees promise to keep employer confidential and trade secret information confidential will go hand in hand with noncompetes as a weapon against former employees. Employees who never signed noncompetes will be told by former employers that working for a competitor would inevitable result in disclosure of confidential information. Will judges side with employees who resist indentured servitude? Don’t count on it.

Employees strike back: Working people and the unemployed will eventually wake up to what is happening to them. They’ll start standing up for their rights and demanding that their elected representatives work for them to restore their right to quit and work somewhere else, to get paid and not have a potential employer hold that against them, and that they be able to work free from sexual harassment. Will they do it in time for the November election? Ask again later.

8 Things Every Employee Should Know About Trade Secrets

You might have read about the suit PayPal filed against Google and two of its former executives, accusing them of stealing trade secrets. But you don't need to be a high-ranking executive to get caught up in a trade secret suit these days. It's common for companies to have employees sign an agreement saying they won’t take trade secrets or confidential information when they leave. Many employees wrongly assume that, just because they never signed an agreement, they can take their employer’s customer list or other confidential information and use it to form their own business or give it to their new employer.

On the other hand, most company information is not a trade secret. Even if you did sign a confidentiality agreement, some information isn’t protected. Whether or not you signed an agreement regarding your company’s trade secrets, every employee is affected by trade secret law. Here are some things you need to know about trade secrets and your employment:

• Independent value. It’s only a trade secret if the very fact of it being unknown to competitors makes it have independent value. In other words, if it would be something a competitor would value, then it might be a trade secret. If you are the safekeeper of the KFC secret recipe or know the formula for Coca Cola, it’s a no-brainer that you have a trade secret. But competitors might find other, less obvious information valuable, such as client lists, manuals, or pricing.
• Kept confidential. Your company will almost always claim that their customer list is a trade secret. Yet many companies brag about customers on their websites. Some even put their whole customer list, pricing, brochures and manuals out there on the web. If the company put it on the web, it can’t be a trade secret. Same with anything they put out in the public. If they put their “secret recipe” into a charity cookbook, goodbye trade secret. If they apply for a patent for the information, the information becomes a public record and is no longer a trade secret.
• Not available through public sources. If the way your company gets its business is through cold-calling the yellow pages, business directories, Chamber of Commerce listings, or Google, then they probably can’t protect their customer list. If, for instance, you sell widgets to airplane manufacturers, your potential client list is a finite one. If you search for “airplane manufacturer” on the web and can generate a potential client list, the courts will probably say you’re allowed to do so when you work for a competitor.
• Not available for purchase. If your company gets leads from a purchased source, the leads are not a trade secret. Let’s say everyone in your industry gets leads by an email alert that they pay to subscribe to, so that when an event occurs that causes your customers to need you, everyone who pays gets an email and the first to contact the customer or the one with the best price wins. That’s treated the same as a publicly available source. It isn’t a trade secret.
• Not ascertainable. Just because the company keeps it under lock and key and thought of it first still doesn’t necessarily make it a trade secret. For instance, if the company compiles a “secret database” of leads, but their compilation consists of buying up yellow pages, Dun and Bradstreet listings, and a chamber of commerce directory and merging them into one list, it’s not hard for a competitor to come up with the same list. The information has to be something they used considerable time and expense to put together, and that a competitor wouldn’t be able to figure out on their own.
• Noncompetes and trade secrets. Noncompete agreements can only be used to protect a legitimate interest of the employer, such as trade secrets. The one thing a noncompete agreement can never be used for is to prevent competition – that’s antitrust and a violation of federal and most state law. If your noncompete agreement says its purpose is to protect the company’s trade secrets, then the company can only enforce it if you had access to actual trade secrets.
• Don’t do it. If you had access to a trade secret, you can’t blog or tweet about it. You can’t email it to yourself and use it. You can’t give it to your new employer. You can’t give or sell it to a friend.
• Bully tactics. Some companies will use an employee’s access to trade secrets to bully them into not working for a competitor or going out on their own. When the employee announces they’re leaving, the company lawyer sends a letter threatening the employee with a trade secret suit. Many employees get scared and stay or get jobs outside their industry because they can’t afford to fight or lose their jobs. Just because you had access to a trade secret doesn’t automatically mean you can’t work in a competing business. Most company information isn’t a trade secret.

If you signed a confidentiality agreement or had access to something you think might be a trade secret, get advice from an employment lawyer in your state about your rights and responsibilities before you accept a job from a competitor or copy the information to use after you leave.

Who Owns My Social Media Contacts and Posts?

Most employees think their social media is none of their employer’s business. So, who owns your social media contacts and posts? While you may think you own your contacts and posts online, the answer may depend on what agreements you’ve signed with your employer.

When you leave, it is possible for your former employer to make a claim to some or all of your social media contacts or posts.

My guest post on Monster.com tells what you need to know about who owns your social media when you leave your job.

Thanks to my friends over at MonsterThinking for continuing to ask me to post. It's such an honor to be asked to guest blog for the nation's best job hunting site (and the one I use when I need to hire employees).