Proprietary Information: What Hiring Managers Need to Know

Protecting your company’s data and intellectual property is important as it keeps your information from being stolen from outside parties and helps you maintain your competitive edge in the market. By implementing company policies and strategies that properly secure your proprietary information, you can prevent employees from leaking critical company data and ideas to competitors. Learn more about what proprietary information is, view examples of proprietary information and discover ways to protect your company’s important data.


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What is proprietary information?

Proprietary information is company data, details and information organization members wish to keep private from outside parties. Certain pieces of company information are considered proprietary as long as the company treats it as confidential and doesn’t release it for public use or visibility. If an employee releases this confidential information to outside parties, they could face legal repercussions. 

The company must prove that it has taken necessary precautions to keep this information protected by implementing security measures like password protecting documents and instructing employees to sign non-disclosure agreements. Most employers have their employees review and sign a proprietary information agreement before starting their position or collaborating on an important project. This legal contract specifies the information and materials that the employee must agree to keep confidential for a certain time period.

There are many different materials that companies consider proprietary, including: 

  • Production methods 
  • Marketing and business plans or strategies
  • Salary structures 
  • Customer and prospect contact information 
  • Contracts 
  • Computer system passwords 
  • Trade secrets 
  • Company financial data 
  • Product research and development


Examples of proprietary information

Proprietary information comes in several forms and can be considered legally protected if you take the necessary steps to ensure its security and clearly communicate employees’ expectations for keeping this information secure. Common instances of proprietary information you may experience in the workplace include: 

  • Using the onboarding process to show new hires training material that contains confidential company information and instructing employees to sign a contract stating they won’t release this information to outside parties
  • Asking employees to use passwords to protect their information and sign agreements stating they won’t release these passwords to anyone outside of their department or the company unless authorized by an executive team member
  • Collaborating on group projects with more than one other employee that involves building a new product for the company and creating contracts that both parties will sign stating that they’ll keep all of the information throughout the project creation process confidential


Ways to protect your proprietary information

Common ways to protect your company’s proprietary information include:


Build a list of trade secrets and important information to protect

Before communicating to your employees about which information they need to keep secret, you first need to establish which details are crucial to keep secret. Meet with your executive team and request that everyone prepares a list of items beforehand and announces them during the meeting. After agreeing on items to keep confidential, decide which employees are allowed to gain access to these materials. 

This keeps everyone on the leadership aware of which information is being released to certain employees and helps you avoid losing any important information due to misunderstandings or miscommunication. 


Grant access levels to certain employees

Determine which employees need specific confidential employee information to effectively complete their work items. Provide access to certain company details and have them sign non-disclosure agreements stating they won’t release this information to any unauthorized parties both inside and outside of the company. 

Clearly communicate which employees or possibly third-parties the authorized user is allowed to share this information with. Make sure their access is password protected and lock any filing cabinets if the information is available on hard copies. 

Related: Non-Disclosure Agreements: Pros and Cons for Small Businesses


Implement a confidentiality policy for employees to sign 

Write a detailed, clear and relevant confidentiality policy and include it in company materials that are easy for employees to locate and reference when needed, like your company policy or employee handbook. It must clearly state what type of information is considered confidential and the disciplinary action you may take if any important company details are disclosed. 


Train employees how to keep information protected 

Once you distribute a confidentiality policy, conduct training sessions to communicate these policies further to help employees better understand them. Host these sessions during their onboarding process and provide recurring policy meetings to communicate any updates to these policies. 

This helps employees remain more informed and aware of what these policies include and gives them a chance to get clarification on any policy details. Consider giving your managers and leadership teams training on policies as well to help them more effectively oversee and enforce these rules. 


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Frequently asked questions about proprietary information

What's the difference between proprietary and confidential information?

Proprietary and confidential are fairly similar terms. Confidential refers to information that’s meant to be kept secret between certain groups of people. Proprietary information is property or ownership claimed by certain people. A company’s trade secrets are considered confidential information and are also proprietary information since they’re owned by the company.

Is employee salary proprietary information?

An employee’s salary is often considered proprietary information and confidential because a potential leak of this information can communicate your company’s financial situation to others, which may cause competitors to use this information against you. For example, if another company in your industry is trying to recruit one of your employees and learns the salary you currently offer them, they may offer them higher pay.

What elements should I include in my proprietary information agreement?

Your proprietary information agreement should be detailed and clearly define which information your employees are permitted from releasing to the public. Elements to include are:

  • Names of each party signing the agreement
  • List of items to be considered confidential
  • Terms and conditions to the confidentiality agreement
  • Details about what the employee must do with the confidential materials once the contract expires
  • Outline of responsibilities that the party receiving the information must follow

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