When Trade Secrets Walk Out the Door: Protecting Your Business During Employee Departures

By Eugene Bondar, Esq. · Updated September 10, 2026

Most trade secret cases don’t involve hackers. They involve a trusted employee, a resignation, and a forwarding of files “to finish some things up” two weeks before they surface at a competitor with your customer list and your pricing model.

Protection starts long before anyone resigns

Courts protect information only if you protected it. Under the federal Defend Trade Secrets Act, information is a trade secret only if, among other things, “the owner thereof has taken reasonable measures to keep such information secret” and “the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information” (18 U.S.C. § 1839(3)(A), (B)). That means reasonable secrecy measures: confidentiality agreements that actually describe what’s confidential, access limited to who needs it, and offboarding that retrieves devices and cuts credentials on day one, not at the end of the transition month. The strongest evidence in these cases is usually mundane: access logs, agreement signatures, and a paper trail showing the information was treated as secret.

The two-week window

When a key employee gives notice, act on a checklist, not on trust or on anger: preserve their device images before reassigning hardware, review recent downloads and email forwarding, remind them in writing of their obligations, and conduct an exit interview that confirms return of all materials. If something has already left, those preserved logs are the case.

If you’re on the other side

Hired someone whose former employer is rattling the saber, or received the cease-and-desist yourself? In New York, a non-compete “is reasonable only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public,” and “A violation of any prong renders the covenant invalid” (BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388-389 (1999)). An overbroad non-compete may be unenforceable as written (see what’s still enforceable in New York). Don’t assume the letter is right; get it read.

Speed matters enormously in trade secret matters: injunctions go to parties who acted like the information mattered. If you’re seeing the warning signs on either side, contact the firm today. The consultation is free.

Related services: Civil Litigation & Disputes · Business & Commercial Contracts · Rockland County Business Litigation

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