Deciding how to protect confidential information is an important part of the modern business world. Every business deals with confidential information daily, including lists of customers and marketing plans, and protecting this information is of the utmost importance.

Basics of Protecting Confidential Information

Because of the constant threats posed by spam emails and computer viruses, every organization should be concerned with the information coming into its network. Of equal concern, however, should be the information that's leaving your business network.

Data theft has exploded in recent years, causing businesses to realize that they need a solution for preventing leaks of vital information:

  • Financial data.
  • Proprietary technology.
  • Data not meant for public viewing.

Regulations now require financial institutions to develop policies that will help protect a consumer's personal information. One of the biggest risks for losing confidential data is a former employee leaving your company and choosing to work for a competitor. Failed negotiations during which confidential information has been revealed is also a big risk. Fortunately, you can protect your business's important information a few easy ways.

Solutions for Securing Confidential Information

First and foremost, it's important that you label your confidential information properly. In many cases, legal protections only exist if you are actually treating your information as confidential. Another benefit of properly labeling your information as confidential is that the label can work as a deterrent for improper use or sharing of this information. You can use this labeling both on physical documents and documents in electronic form.

If you need to give someone a document that includes confidential information, you should alert them to the fact that the information is private as soon as possible. Also, it's important that you keep nonconfidential information and confidential information separate.

You can also protect confidential information by making sure that all employment agreements used by your company include a nondisclosure provision. Every employee who will have access to sensitive information should be required to sign a contract with one of these provisions. When an employee leaves your company, whether their exit is voluntary or they have been terminated, you should make sure that they return any confidential information to which they had access.

While you could also include a noncompetition clause in your employment agreements, this may be very hard to enforce. Nondisclosure provisions, on the other hand, usually can be enforced.

By law, employees are subject to certain confidentiality obligations. Adding a nondisclosure clause to employment agreements, however, gives you further legal protections and indicates to your employees that you are serious about keeping private information secure. If you're not sure how to write a confidentiality agreement effectively, you should research other types of agreements that may contain similar clauses.

Perhaps the most effective way to shield the private information of your business is by limiting access. The more people who have access to your confidential information, the more at risk it will be, so restricting access to a select group of people is of the utmost importance. Limiting access can both create obstacles to those who wish access for improper purposes and can also put you on better legal footing if this information is breached.

If you use physical documents for your company's sensitive information, these documents should be locked up when not in use. Similarly, electronic information should be protected with passwords, and you should also monitor who accesses your computers. When you need to bring legal action against a former employee who has stolen confidential information, having a record of their suspicious activity will help with your case.

All businesses need an employee handbook, and in this handbook, you should have a clearly stated policy related to confidentiality. You should describe your company's procedure for handling confidential information and possible repercussions if this information is disclosed improperly. For instance, if it is your company's policy to shred sensitive documents when they are no longer needed, this should be reflected in your employee handbook.

Finally, you should make sure that every employee who leaves your company sits down for an exit interview. While the interview is taking place, you should make sure the employee understands that they are required to hand over any confidential information in their possession and that they are obligated not to provide this information to any future employers.

If you need help determining how to protect confidential information, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.