Hiring Across the 49th Parallel: Traps for the Unwary for Cross-Border US-Canada Hires (Part III)

In today’s competitive market, safeguarding intellectual property (IP) and managing employment risks are critical for businesses operating in Canada and the United States. From onboarding to departure, employers must safeguard their interests and manage restrictive covenants in an evolving legal landscape. In this Part III of our cross-border series, we discuss practical strategies to mitigate risk and protect your organization throughout the employee lifecycle.

Employee Onboarding

Hiring new talent can expose companies to significant risk if not handled carefully. In order to shield the business from potential legal claims from third-parties and protect a company’s confidential information and IP, employers should develop a robust and diligent practice to vet potential candidates, such as:

• Reviewing any existing restrictive covenants early in the onboarding process.
  • Require disclosure of and carefully examine any agreements provided by candidates to identify contractual restrictions and potential conflicts.
  • If identified, develop and implement strategies to mitigate potential claims.
• Assessing IP ownership issues.
  • Have an updated summary of material trade secrets for the employer.
  • Without soliciting trade secrets of a prior employer, determine the nature of the employee’s previous work, and form a plan for avoiding conflict between the employee’s anticipated contributions to IP with prior work and for preventing inadvertent infringement.
• Conducting enhanced due diligence.
  • For roles with access to highly sensitive information, consider enhanced due diligence beyond standard background checks, including court record and social media searches for prior allegations of misconduct, such as trade secret misappropriation.
• Documenting and retaining candidate communications. 

If the business decides to proceed with onboarding a candidate, for purposes of protecting the employer’s assets and minimizing risk of a claim from a prior employer, the employer should enter into a written and duly executed offer letter or employment agreement that:

• Instructs the employee not to use or disclose a prior employer’s confidential information or IP.
• Requires certifications confirming that the employee returned all prior employer materials and is in compliance with existing obligations to prior employers.
• Includes protections, such as confidentiality, invention assignment, non-solicitation and, where permitted, non-compete provisions.

For new employees with prior access to potentially competitively sensitive or technical information from prior employers, onboarding employers should instruct and train employees to avoid the use of such proprietary information, as well as provide guidance with respect to the proper handling and protocols regarding their own proprietary information. In addition, employers can consider implementing internal safeguards to protect their sensitive information and IP to the extent compliant with applicable law, such as:

• Limiting access to trade secrets.
• Enforcing security protocols and encryption.
• Monitoring device usage.
• Providing comprehensive and periodic training on confidentiality obligations.

Mid-Lifecycle

Outright non-compete bans or restrictions continue to expand in jurisdictions like Ontario and across U.S. states, where legislation that bans or limits non-competes remains pending in Michigan and North Carolina. These changes require employers to rethink traditional strategies to protect their proprietary information. Employers should review existing restrictive covenants agreements to ensure compliance with current law and consider whether any changes are needed based on evolving jurisdictional requirements. Canada’s 2025 federal budget, for example, proposes to restrict the use of non-competes for federally regulated businesses, the details of which should be made available following consultations launching in 2026.

If implementing new or broadening current provisions is required, employers should carefully consider whether additional consideration is required to support the new or different terms, as well as the impact on workplace culture of introducing new or broadening existing post-employment termination restrictions.

Given the changing legal landscape, employers should continually assess existing protections in respect of proprietary information and IP in order to identify and correct any gaps. For example, employers should consider:

• Auditing trade secrets and other IP to properly identify and protect these valuable assets.
• Evaluating whether enhanced practices for accessing or handling sensitive information should be implemented, such as updating training, developing a response protocol for inadvertent disclosure of company information, or imposing further restrictions on information access.

Employee Departure

Departures introduce additional risk to an employer’s IP and confidential information, particularly where an employer has not maintained the best practices outlined above. In order to minimize the risks posed by a departing employee to a company’s IP and confidential information, employers should:

• Provide departing employees with copies of their restrictive covenants agreements and reiterate obligations.
• Request acknowledgment that covenants remain in effect following departure.
• If no covenants exist, or if current covenants do not sufficiently protect the business, consider implementing new or broader covenants where permissible and with adequate consideration provided.
• Immediately terminate all employee system and device access at separation.
• Conduct exit interviews and ensure the return of all company property.
• Enhance protection of material IP that may be at risk as a result of the departure.
• Preserve devices and monitor company systems to detect unauthorized transfers.

These steps help prevent misappropriation and position the company to act quickly if issues arise.
 

Conclusion

Proactively managing IP and employment risks throughout the employee lifecycle is critical to safeguarding business interests. Employers who apply thoughtful practices from onboarding through departure minimize exposure and ensure their business is protected.

To review Part I of our cross-border hiring series discussing governing law, termination, and classification issues, please click here.

To review Part II of our cross-border hiring series discussing employer provided health and retirement benefits, please click here.

To review our recent updates on non-competition enforceability in the U.S., please click here (update of Massachusetts law) and here (use of non-competes in private equity transactions). 

For questions about your employee onboarding and off-boarding practices and best practices for protection of intellectual property in the United States and Canada, please contact Mintz’s Employment or Intellectual Property Practice.

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