President Obama signed into law the Defend Trade Secrets Act of 2016 (“DTSA”) last week which provides a federal cause of action for misappropriation of trade secrets. Prior to its enactment, trade secret misappropriation claims were generally governed by state laws. Companies who are victims of misappropriation will now have the opportunity to litigate trade secret misappropriation claims in federal court. Notably, the DTSA does not preempt the state laws governing misappropriation so trade secret litigation can still be pursued in state court.

The substantive rights under the DTSA are largely the same as those rights provided under the Uniform Trade Secrets Act (“UTSA”) which has been adopted by most states. However, unlike the UTSA, the DTSA permits ex parte seizure of the misappropriated material under extraordinary circumstances. The DTSA also forecloses the possibility of obtaining injunctions based upon the “inevitable disclosure doctrine”. In other words, there must be evidence of a threatened misappropriation to obtain injunctive relief and injunctions cannot be based on simply on the fact that the information is known to the former employee.

Most significantly, the DTSA permits whistleblowers and individuals bringing retaliation claims to disclose trade secrets to their counsel and law enforcement officials for purposes of reporting violations of law without civil or criminal liability. The DTSA also permits the disclosure of trade secret information in court documents filed by a whistleblower or retaliation claimant as long as the documents are filed under seal. Employers are required to provide written notice of this available immunity under the DTSA in any non-disclosure agreements, confidentiality agreements and/or any other policies or manuals that govern disclosure of trade secret information. Employers who do not provide this notice will be foreclosed from recovering exemplary damages and attorney’s fees available under the DTSA. Accordingly, employers seeking to take advantage of recovering exemplary damages and fees should update their agreements and policies used with employees and contractors.

If you require assistance updating policies and agreements regarding confidentiality and non-disclosure of trade secrets or have any questions regarding the DTSA, please contact Jennifer Myers Chalal at jchalal@lawsgr.com or (215) 241-8817.

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The new rules proposed by the U.S. Department of Labor that will greatly increase the minimum salary requirement for employees to be considered exempt from overtime under the executive, administrative or professional exemptions have been adopted and will go into effect on December 1, 2016. The new rules key the minimum salary requirement to what the DOL determines is the 40th percentile of the salaries for all full-time salaried employees, currently $913 per week or $47,476 annually. Nondiscretionary bonuses and incentive payments (including commissions) may be used to satisfy up to 10 percent of the required minimum salary.

While this increase is less than what was originally proposed ($921 per week), it is still more than double the current $455 weekly salary threshold. Under the final rules, the minimum annual salary will not increase each year, but will be reviewed and could be increased every three (3) years as the annual salaries of full-time salaried employees increase. The threshold annual salary for the “highly compensated” exemption will be raised to $134,004.

In the interim, the House and Senate bills that would block the new overtime rules, Senate Bill 2707 and House Bill 4773 are still in committee.

All employers need to review their compensation structure and determine whether or not the employees they are treating as exempt under the administrative, executive or professional exemptions will meet the new minimum salary threshold, and either adjust employee salaries or prepare to treat employees whose salaries fall under the new threshold as non-exempt for overtime purposes.

If you have any questions or would like additional information, please contact Nancy Abrams at nabrams@lawsgr.com or 215-241-8894

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