Trade Secrets and NDAs: What HR Professionals Must Know

Executive overview

A trade secret is confidential business information that delivers competitive advantage, but it only qualifies for legal protection when it is secret, commercially valuable, and actively protected. HR professionals sit at the intersection of creating, communicating, and enforcing that protection — through onboarding, NDAs, and offboarding. Recent federal developments have added meaningful constraints on how NDAs can be used, particularly around harassment claims and antitrust whistleblowing. HR's role is not just administrative: crafting enforceable, legally compliant confidentiality practices is a core risk-management function.

What qualifies as a trade secret

• Must meet three criteria: not publicly known, holds commercial value, and is actively protected.
• Common examples: proprietary formulas, customer lists, business strategies, manufacturing processes, unique software algorithms.
• Confidential information that lacks active protection measures may lose trade secret status.

Legal landscape: federal considerations

• Speak Out Act (effective December 7, 2022): bars enforcement of pre-dispute NDA clauses that silence employees in sexual assault or harassment cases.
• NDAs can still protect legitimate business information (trade secrets, proprietary data) under the Speak Out Act.
• DOJ/OSHA clarification (January 2025): NDAs cannot legally prevent individuals from reporting antitrust violations, reinforcing the Criminal Antitrust Anti-Retaliation Act of 2019.
• Uniform Trade Secrets Act (UTSA): adopted by most states; defines trade secrets and provides remedies (damages, injunctions) for misappropriation.
• UTSA works alongside the federal Defend Trade Secrets Act (DTSA), giving companies both state and federal enforcement paths.
• State implementations vary — some impose stricter standards for what counts as "reasonable efforts" to protect secrets.

HR best practices for protecting trade secrets

• Onboarding: communicate confidentiality policies clearly to new hires; provide ongoing training to reinforce expectations.
• NDA design: make agreements specific, compliant with current law, and tailored to the type of information being protected.
• Offboarding: remind departing employees of continuing confidentiality obligations; secure return of all company property and relevant documentation.
• Centralise documentation and automate compliance notices to reduce human error and audit gaps.