344 | 2023 Cal-Peculiarities ©2023 Seyfarth Shaw LLP www.seyfarth.com rather would keep the recruiting nurses from competing in their chosen profession.42 While this decision might be limited to its facts, employers should carefully consider whether it puts an end to traditional employee nonsolicitation agreements. Some federal courts have followed this 2018 Court of Appeal decision and have found non-solicit covenants void, while other courts have continued to apply Loral. Some state trial courts have continued to apply Loral and validate the continued viability of post-termination non-solicit covenants. In any event, restrictions on solicitation during employment remains undisputably valid. 12.4.3 Protection of trade secrets Employers remain free, of course, to contract with their employees to protect employer trade secrets.43 It may seem superfluous for an employer to contract for protection of trade secrets, when statutory protection for those trade secrets already exists (see § 12.5). But formal employment agreements could help define trade secrets, provide additional deterrents to misappropriation of trade secrets, provide contractual remedies, and call for special procedures to seek trade secret protection, such as a provision for injunctive relief and a provision for prevailing-party attorney fees, at least for certain employees. But such agreements should be judicious. An “overly restrictive” agreement can “operate as a de facto noncompete provision.”44 In 2020, the Court of Appeal addressed a case involving a company that engaged in a highly computerized form of equities trading known as statistical arbitrage.45 It sought to protect its information by requiring employees to sign a series of agreements which defined “Confidential Information” so broadly as to prevent employees from ever working again in securities trading, much less in statistical arbitrage. The Court of Appeal held this overly-broad agreement was “void ab initio and unenforceable.”46 12.5 Protection of Trade Secrets Virtually every state, including California, has enacted the Uniform Trade Secrets Act.47 The UTSA could forbid a former employee from using the former employer’s trade secrets, such as confidential client lists, to solicit clients.48 12.5.1 Application to customer lists Some, but not all, customer lists qualify for protection as trade secrets. Important factors to consider are whether the names are generally known or readily ascertainable to others in the same business, and how much effort one would need to compile the list.49 12.5.2 Application to employee identities A 2018 Court of Appeal decision rejected an employer’s effort to sue its former employees (certain traveling nurses) for raiding the employer’s employees; the employer claimed that the traveling nurses’ names and contact information were trade secrets. This information was not a trade secret, the Court of Appeal held, because the traveling nurses at issue had applied for employment elsewhere before they were recruited by the formeremployee-defendants, and their identities were widely known within the industry.50 12.5.3 Inapplicability of “inevitable disclosure” doctrine In many jurisdictions, courts help employers victimized by disloyal departing employees by applying the “inevitable disclosure” doctrine, which holds that an employer can enjoin a former employee from working for a competitor where the employee’s duties with the competing employer are such that the employee would inevitably disclose the former employer’s trade secrets. In California it’s different. The Court of Appeal has rejected the inevitable disclosure doctrine.51 Employers concerned about theft of trade secrets can, however, use California’s
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