How to Guard Company Property in a Termination Agreement with an Employee?

By The Law Office of Yoel Molina.
 
The fundamental tenet of a separation agreement is that in exchange for the departing employee making specific obligations to the business, the company agrees to provide something of value (consideration)—typically in the form of a separation payment—to the employee. Protecting your company's assets should be one of the main goals of any separation agreement.

Any employee you recruit may leave on convoluted terms. Employees occasionally leave their jobs because they're dissatisfied or believe that office politics is forcing them out. Some workers are given the option to leave, while others are abruptly let go for any cause. Frequently, one party will place the blame on the other, or there will simply be irreconcilable disagreements that prevent the working partnership from continuing. It's a good idea to establish a separation agreement in any of these scenarios where an employee's departure might be caused by less than ideal conditions in order to prevent disputes and safeguard your company's interests.
 
Keeping Private Information Safe:
One of the most precious assets of your organization is its exclusive knowledge. It includes a list of all your key stakeholders, including addresses, phone numbers, email addresses, financial information, company plans, strategies, documents, communications, work products, legal information, and customer and supplier lists. Even a tiny bit of this knowledge divulged to a rival could swing the market balance heavily in their favor. A public relations nightmare or a competitive disadvantage for your business in a court case could result from the disclosure of secret information. As a result, employees are frequently asked to sign a nondisclosure agreement (also known as a confidentiality agreement or NDA) before starting work for a corporation due to the need of protecting secret information.
Employees frequently have access to or come into contact with at least some of a company's sensitive data. A separation agreement can assist ensure that the employee, regardless of any personal feelings the employee may have towards the organization, maintains any sensitive information confidential, particularly in situations when the employee may be leaving on bad terms.

A separation agreement's non-disclosure (confidentiality) clauses should be written as extensively as possible to include not just all confidential information in general but also those particular items that are of particular value and importance to the business. A technology corporation, for instance, would be especially interested in safeguarding its intellectual property holdings. A food product manufacturer could want to take precautions to prevent the disclosure of the components of their secret sauce. It's often a good idea to specify what is and isn't considered "confidential information." The nondisclosure clause should also be in place for the longest period of time possible.
 
Ownership Rights:
Confidentiality clauses and the protection of property rights are frequently confused. Because of this, proprietary rights clauses are frequently left out of separation agreements. However, the defense of proprietary rights is a different, distinct, and significant issue that ought to be addressed as well, particularly for businesses with a stake in retaining ownership of their trade secrets and intellectual property. The key distinction between a nondisclosure clause and a proprietary rights clause is that the latter states that any inventions or intellectual property developed by an employee while employed automatically become the company's property. On the other side, the nondisclosure clause forbids the departing employee from divulging the business's trade secrets or intellectual property.

The intellectual rights provisions, as opposed to the nondisclosure requirements, are instantly enforceable and only pertain to restrictions on the employee's future activity. The employee must sign and produce all appropriate paperwork for all intellectual property rights to be assigned to the company before the employee can get the separation compensation, according to the corporation. This gives the employer the power to assure the worker's complete compliance. Furthermore, the proprietary rights clause should stipulate that the employee will comply with any process by which the business subsequently attempts to file a copyright, patent, or trademark with regard to any such intellectual property.
 
Return of Corporate Assets:
When an employee was fired in the past, it's possible that they may have taken some random office supplies with them (highlighters, pens, paperclips, and the like). The current technology development has allowed employees to carry gigabytes of business data on a portable hard drive, nevertheless. Therefore, before any separation payment is given to the employee, the separation agreement should have a provision stipulating that the employee would return all corporate property, such as all tools, records, memoranda, keys, disks, and so forth.
​
Similar to the regulations governing proprietary rights, the Company may use withholding of any separation consideration until the Employee has completely complied to exert immediate pressure on the Employee to return Company property. This provision should include the employee's representation that all goods have been returned and that they haven't kept any copies or duplicates if the employee has previously returned all of the property the company requested. It should be noted that this provision complements the confidentiality requirement because it is considerably more challenging for an employee to disclose secret information if they no longer have access to the supporting data and documents.


If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020, option