In 2024, the Federal Trade Commission (FTC) issued a rule banning most noncompete agreements nationwide. Although enforcement is currently stayed (paused) pending legal challenges, courts and legislatures continue to narrow or eliminate noncompete enforceability—prompting employers to reevaluate how they protect proprietary information and competitive advantage.
In response, many employers are turning to trade secret law. But protection requires more than labeling information “confidential.” It demands proactive, legally sound practices throughout the employment lifecycle—from onboarding through exit. Now more than ever, understanding how trade secret enforcement intersects with employment law is essential in safeguarding your company’s intellectual property and competitive edge.
Shrinking Enforceability of Noncompete Agreements
Even before the FTC’s 2024 rule, states were limiting noncompetes. Some, like California, ban most noncompetes outright. Others, such as Illinois and Colorado, impose wage thresholds or restrict use to certain roles. Where noncompetes remain legal, courts typically apply a reasonableness test to assess whether the restrictions protect a legitimate business interest and are reasonable in duration, geography, and scope.
For example, Arizona courts enforce noncompetes only if the employer shows a legitimate business interest—typically involving trade secrets, customer relationships, or employee training. Restrictions must be narrowly tailored. A company operating regionally, for instance, generally cannot bar an employee from working nationwide unless their role was national in scope. Similarly, courts uphold durations only where it’s justified by business needs—such as the time required to replace the employee, restore client relationships, or align with business cycles, like pricing or product updates.
Trade Secret Law as an Enforcement Avenue
With noncompetes under pressure, trade secret law—under the federal Defend Trade Secrets Act (DTSA) and the Uniform Trade Secrets Act (UTSA)—has become a key tool. To qualify for protection, information must have economic value from not being generally known or readily ascertainable, and the employer must take reasonable steps to keep it secret.
Trade secrets can include manufacturing methods, marketing strategies, recipes, pricing models, and other business or technical data. Even compilations of public information may qualify if their value lies in the unique way they are organized or used.
Misappropriation occurs when someone acquires a trade secret through improper means or uses or discloses it without consent, knowing or having reason to know it was obtained improperly. It can also arise when someone discovers a trade secret by accident or mistake and uses it for their own financial gain after recognizing its confidential nature.
These claims often involve departing employees who misuse confidential information to benefit a competitor. For instance, an employee might email product plans or pricing data to a personal account before resigning and later use that information to gain an edge in sales. Courts have held that liability may arise even when no documents are physically taken—and reliance on memory alone can suffice.
New employers may also be liable for misappropriation if they exploit trade secrets brought in by new hires. For example, hiring someone with know-how of a competitor’s proprietary strategies and leveraging it to accelerate product development—like knowing which features to prioritize or avoid—can amount to misappropriation. Courts recognize that “use” includes relying on a trade secret to inform decisions, even if the end product doesn’t copy it verbatim.
Litigation Trends and Common Defenses
Inevitable disclosure doctrine. Some employers assert the “inevitable disclosure” doctrine, arguing that a former employee in a similar role at a competitor will inevitably rely on their trade secrets. The theory is that performing the new role would be virtually impossible without using trade secrets from the former employer.
Although not recognized in all jurisdictions, courts applying the doctrine typically require proof that the companies are direct competitors in a niche market, the employee had access to sensitive information in the prior role, and the new role significantly overlaps with the prior one.
General trade, knowledge, and skills defense. You shouldn’t confuse general industry knowledge with protected know-how. Courts recognize that employees are free to take their industry expertise, training, and general knowledge to future roles, even in the same field.
However, the line between general skill and protected know-how is fact-specific. The key question is whether the improvements or techniques at issue arise from general experience or from confidential, proprietary methods.
Ultimately, courts assess whether the employer can show that the employee relied on specific, nonpublic information gained through their role, rather than general experience developed over time. You must be able to pinpoint what was misappropriated and how it differs from general industry knowledge.
Public disclosure defense. A common defense in trade secret litigation is that the information isn’t a trade secret because it’s already public. Courts require trade secrets to remain confidential, and any public disclosure—intentional or otherwise—can destroy that status. Defendants often argue that the information is widely known in the industry or easily found through public sources.
One example is when a company discloses information in a published patent. Courts have held that such disclosure places the information into the public domain and extinguishes trade secret protection, but only to the extent of the information actually revealed in the patent.
Employment Law Considerations: Contracts, Policies, and Process
Trade secret enforcement depends heavily on the steps employers take before litigation—through contracts, internal policies, and disciplined processes. These measures form the foundation of enforceable protection and are key factors courts consider when evaluating whether reasonable efforts were made to safeguard the information.
Confidentiality agreements. In the absence of enforceable noncompetes, well-drafted confidentiality agreements are essential. To be effective, these agreements must be carefully drafted. Courts often find blanket references to “all company information” overly broad and therefore unenforceable. Instead, they should define specific categories of confidential or trade secret information, such as customer lists, pricing strategies, or product designs.
The agreement should also specify how confidential information may be used and disclosed during employment, set clear expectations for safeguarding it, and outline postemployment confidentiality obligations. Importantly, it must include exceptions for legally protected disclosures, such as whistleblower reports or rights under the National Labor Relations Act (NLRA).
Policies and access control. You should also adopt internal confidentiality policies that reinforce contractual obligations and demonstrate a proactive approach to protecting sensitive information. Whether included in an employee handbook or issued as a standalone document, the policies help establish that you took reasonable steps to maintain secrecy. Strong policies typically:
- Define what constitutes confidential information;
- Clarify employee responsibilities;
- Apply across both in-office and remote work environments; and
- Identify which roles or departments are authorized to access specific information.
Access to sensitive information should be limited on a need-to-know basis and protected through appropriate security measures, such as encryption, authentication protocols, and physical safeguards.
Onboarding and offboarding. At onboarding, employees should sign confidentiality agreements and receive training on trade secret obligations. Upon separation, you should:
- Retrieve all company property, devices, and documents;
- Revoke system access immediately; and
- Remind employees of ongoing confidentiality obligations during an exit interview.
In higher-risk departures, you may also preserve electronic records or review access logs to identify potential exposure.
Best Practices Moving Forward
To reduce legal risk and respond to evolving enforcement trends, you should:
- Review all employment agreements and remove or revise noncompete language where enforceability is questionable;
- Supplement noncompetes with strong confidentiality agreements tailored to actual business interests;
- Train employees regularly on confidentiality and data handling;
- Audit your trade secrets regularly and clearly document what is protected and how;
- Follow consistent offboarding procedures; and
- Monitor changes in federal and state law, including ongoing challenges to the FTC rule.
Employers that align their employment policies with trade secret enforcement will be best positioned to defend their competitive edge in 2025 and beyond.
Emily E. Brodner (associate) and Juliet S. Burgess (founding partner) are attorneys at the Burgess Law Group (www.theburgesslawgroup.com) specializing in labor and employment law, intellectual property, and commercial litigation.