Inspection Strategies: How to Protect Trade Secrets during OSHA Inspections

Date First Published on SafetySmart Compliance: February 28th, 2012
Topics: OSHA Inspections |

When OSHA inspectors come to your facility, they can demand access to all kinds of information residing in your files. That may include proprietary and confidential business information such as manufacturing processes, trade secrets and business arrangements that you don’t want to share. Here’s how to protect against this risk.


Click here for a Model Memo you can use to tell your staff how to safeguard proprietary information during an OSHA inspection.


Click here for a Model Notice you can use to request that OSHA not grant access to proprietary information under a so called FOIA request.


What’s So Bad about OSHA Seeing Your Trade Secrets


Having OSHA see your trade secrets and other sensitive business records might not seem like that big a deal. After all, OSHA inspectors don’t publish the materials they collect from private businesses or disclose them to the public. . .


. . . That is, unless they have to.


The problem is that there’s a law called the Freedom of Information Act (FOIA) which entitles journalists, commercial entities and individuals to request specific information from a public agency. Although FOIA includes provisions to guard the confidentiality of trade secrets provided by companies to regulatory agencies, these protections might not cover all of the information you deem proprietary.


The good news: OSHA has a procedure for shielding certain kinds of proprietary information gathered during inspections from FOIA requests. The bad news: OSHA doesn’t follow the procedure automatically. You need to specifically notify OSHA that certain information it collected is proprietary so it can activate the protection process.


OSHA Protection of Trade Secrets


The OSHA trade secret protection rules are contained in the OSHA Field Inspection Reference Manual (the Manual) handed out to inspectors. According to the Manual, trade secrets mean “matters that are not of public or general knowledge,” including “any confidential formula, pattern, process, equipment, list, blueprint, device or compilation of information” used by an employer to gain a business advantage over competitors that don’t know or use the information. This can include not just written documents but photographs, computer tapes, databases and other forms of information.


To get protection, employers must notify the OSHA inspector when granting access to information that they think is a trade secret in the course of an inspection. Once inspectors are on notice, they must handle the information in a confidential manner to ensure that it’s not intentionally or inadvertently disclosed to the public. Specifically, OSHA will label information considered a trade secret as “Administratively Controlled Information; Restricted Trade Information.”


OSHA officials can’t disclose information labeled this way to anybody except other OSHA officials and only under limited conditions or during a legal proceeding involving the inspection, e.g., an OSHRC appeal. OSHA officials who fail to abide by these restrictions face the risk of criminal penalties.


A Practical Strategy to Protect Trade Secrets


To avail yourself of this protection for trade secrets, you need to alert your staff to take certain steps when OSHA inspectors show up. If nobody tells the OSHA inspector that the information being handed over is a trade secret at the time it’s disclosed, it might be too late to protect it against public disclosure later.


Step 1: Instruct Staff


The first thing you need to do is notify staff members who deal with OSHA inspectors what to do when and if OSHA inspectors arrive to protect trade secrets. Click here for a Model Memo you can use to accomplish this. Although you need to adapt it to your own circumstances, like the Model Memo, your instructions should:


1. Warn of the Danger: First notify staffers that OSHA inspections can threaten the confidentiality of important proprietary information and that they must take steps to keep that information secure.


2. Explain What a Trade Secret Is: Tell staff what a trade secret is. List examples. Better yet, draw up a list of all proprietary information that could be compromised during an OSHA inspection and attach it to the memo.


3. Tell Staffer to Request Protection: Explain that the law gives you the right to request that OSHA protect your trade secrets from public disclosure if you request it. And tell staffers to make sure they request it. Instruct them to use the Model Notice in for this purpose.


4. Explain How to Complete Notice: Instruct staffers to list each item of proprietary information disclosed during the OSHA inspection as a trade secret on the Notice form. Tell them to sign and date the Notice once it’s completed and have the OSHA inspector do the same. Finally, have them give the inspector a copy and keep the original on file with the other documents generated by the inspection.


5. Solicit Questions: Last but not least, have staffers to check with management if they have any questions or uncertainties regarding trade secrets and the protection notification process.


Step 2: Submit Request for Confidentiality


The second step in your trade secret protection strategy is to request confidentiality protection from OSHA inspectors. Click here for a Model Notice you can use to request confidentiality. Again, you’ll need to create your own notice based on the Model and make sure it contains the key elements, including:


1. Citation of Legal Authority: Although it’s not specifically required, lawyers recommend that you cite the part of the law (Section 15 of the Occupational Safety and Health Act (the Act)) that gives you the right to request protection of trade secrets divulged during OSHA inspections. This underlines the authority of the request and shows that you’re serious about asserting your rights and protections under the Act.


2. Statement of Request: Make sure the Notice specifies that you’re seeking legal protection of trade secrets under the Act.


3. Itemization of Trade Secrets: Leave spaces for staff members to list the items of proprietary information you claim are trade secrets entitled to protection. Make sure staffers fill each item in before the Notice form is signed and dated.


4. Signature and Date Lines: Finally, leave signature and date lines for both the person at your organization who completes the form and requests protection and the OSHA inspector who receives the request. Without the signatures and dates of both parties, the Notice won’t be legally valid.