HOW CAN TRADE SECRETS BE PROTECTED IN AN OSHA INSPECTION?

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

For many private employers, the secrecy of proprietary information may be the only edge which allows them to remain competitive in a crowded marketplace. For each of these employers, the risk of an intrusive OSHA inspection, which can entail photographs, videos, and interviews regarding sensitive internal operations, is the loss of the secrecy which provides this competitive edge. The greatest protection which can be afforded such proprietary information – immunization from inspection – is simply not available under the Occupational Safety & Health Act (“OSH Act”). OSHA only has a statutory obligation to protect the confidentiality of information learned during an inspection “which contains or which might reveal a trade secret” belonging to the employer. 29 U.S.C. § 664.

Even as to this limited statutory protection, OSHA is not always forthcoming about its obligations or the rights of the employer. After all, the primary goal of an OSHA inspection is to assess the safety of the employer’s working conditions; the protection of trade secrets is secondary to this primary goal. During an OSHA inspection, it is thus generally incumbent upon an employer to take the lead in the protection of its trade secrets.

The most important time for an employer to be proactive in the protection of trade secrets is during the opening conference of the OSHA inspection. The opening conference precedes the components of an inspection where evidence will be gathered by the agency regarding the employer’s internal operations. Four goals can be achieved by the employer during the opening conference.

First, the employer must determine which trade secrets, if any, will be impacted by the anticipated inspection. If the anticipated inspection is limited to certain work areas, protection of certain trade secrets may be accomplished by limiting the scope of the inspection to such work areas, and by eliminating any opportunity for OSHA to view such work areas. Greater protection can be afforded to trade secrets by excluding them from the inspection than by entrusting OSHA to safeguard their secrecy.

Second, the employer must identify to OSHA all of the trade secrets which will be encompassed by the anticipated scope of the inspection. In this regard, the employer should be prepared to justify the value of each trade secret and the steps taken beforehand to safeguard the secrecy of each trade secret. Of course, any discussion of trade secrets should be limited to employees who are already privy to such information.

Third, the employer should identify to OSHA specific work areas, information or inquiries which might reveal a trade secret. The Compliance Safety & Health Officer should not be presumed to have the technical or specialized knowledge to understand what actions on his/her part may be tantamount to an indirect disclosure of a trade secret to an unauthorized employee or third party.

Fourth, the employer should endeavor to reach an agreement with OSHA as to how its trade secrets will be specifically protected. To the extent possible, an agreement should allow the employer to control the sensitive evidence obtained by OSHA to ensure that all such evidence has appropriate written labels regarding their secrecy. OSHA may not be as amenable to protections raised for the first time after an inspection has been completed as it will be for an inspection which has not net yet begun or been agreed to by the employer. Indeed, if a reasonable agreement cannot be reached, the employer should consider, with the advice of legal counsel, whether the inspection should be limited to areas or devices which do not encompass the employer’s trade secrets. For some employers, even the risk of challenging a search warrant may be outweighed by the risk of losing trade secrets.

Even assuming all of its goals are achieved in the opening conference, an employer should not simply trust OSHA to conduct its inspection consistent with such goals. Indeed, the employer should expect OSHA to forget, ignore or even defy such goals. Throughout the inspection, therefore, the employer must continue to be diligent about protecting its trade secrets. If OSHA is unwilling or unable to abide by its agreement to protect the employer’s trade secrets, the employer should consider, with the advice of legal counsel, whether the inspection should be terminated, at least as to areas which encompass the trade secrets.

The most common means by which third parties gain access to OSHA files is through Freedom of Information Act requests or compulsory process in conjunction with litigation. Although OSHA is prohibited from disclosing an employer’s trade secrets under such circumstances, only information identified as such will be protected. If the employer has not been diligent about protecting its trade secrets, it should not expect OSHA to be a worthy gate-keeper as to such information.

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