On September 15, 2021, a divided panel of the Ninth Circuit Court of Appeals decided…
We are all familiar with the cocktail-hour expression “BYOB.” While the practice of allowing employees to bring their personal electronic devices to work (known as “BYOD”) presently sweeping California workplaces is apparently unrelated to booze, the resulting legal headaches are driving many employers to distraction.
BYOD policies have created significant legal problems for employers in the following areas, among others:
- The loss of trade secret/proprietary information protection;
- Infringement on employee privacy rights;
- Overtime compensation for after-hours work on personal devices;
- Added risk of data/security breaches; and
- Claims for employee expense reimbursement.
Problem No. 1: The Loss of Trade Secret Protection
However commonplace this practice has become, it is imperative that employers be aware of the many legal challenges they are inviting by allowing, if not encouraging, employee use of personal devices at work.
By adopting BYOD policies, employers often allow company data, including highly-sensitive information such as trade secrets, to be stored on employee personal devices. This increases the likelihood that unscrupulous employees will transfer, save or use their employer’s proprietary data. Data breaches and hacking also become more probable, if not likely.
Trade secrets are valuable precisely because they are “not…generally known to the public or to other persons who can obtain economic value from disclosure or use.” As a result, to derive legal protection of trade secrets, the holder of a protectable interest is required to demonstrate that the information for which protection is sought is “the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
BYOD policies often undermine an employer’s ability to assert its legal right to trade secret protection. This is because such policies erode the critical “secrecy” element of a trade secret misappropriation claim for the reason that they often presuppose the ability of employees to download proprietary information onto personal electronic devices.
It is therefore of critical importance for employers wishing to protect their trade secrets to develop and administer written policies designed to address these and related legal issues presented by BYOD policies, constantly evolving technology and its proliferation in the workplace.
Any attempt to protect trade secrets must begin with identifying, designating and labeling confidential, proprietary and trade secret information as such. While this alone does not conclusively establish a legally-protectable interest in such information, in conjunction with other measures designed to optimize secrecy and limiting access, conscientious labeling policies have long been considered an important element in establishing trade secret and protected status generally.
Other legal problems associated with BYOD policies will be addressed in subsequent issues.
Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives.
While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued with his comprehensive system of precautions in place.
For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well.
You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them. http://www.jaygputnam.com/newsletter/