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Employment Non-Disclosure Agreements

December 30, 2022 Legal Team

Many employees must enter into non-disclosure agreements (NDAs) before beginning work at a new company. These agreements limit how employees may use employers’ information and come with harsh penalties if they violate them.

What is a Non-Disclosure Agreement?

A non-disclosure agreement (NDA) is a contract, typically between an employer and employee, that establishes the confidentiality of certain protected information. For example, to protect proprietary information or trade secrets that the company wishes to remain private. An employer decides which information is protected under an NDA, but typically includes restrictions involving:

  • Client or product information
  • Plans for marketing or sales campaigns
  • Specialized processes
  • Passwords
  • Internal emails
  • Patent or trademark information

If the information has value to both the company and its competitors, an employer will make sure it is covered by an NDA. However, it cannot cover knowledge that is known to the public. An NDA typically lasts for the duration of employment and extends for a period beyond their termination.

When Are Non-Disclosure Agreements Signed?

NDAs are most commonly signed when:

  • Accepting a job: NDAs are typically part of a larger employment contract which is usually signed before you can start a new job.
  • Before an interview: Some companies may require a signed NDA before you can interview for a job. They may wish to keep their interview questions private or to discuss non-public issues the company is facing or trade secrets.
  • Accepting a promotion: If you are promoted, your company may ask for an NDA if you will be gaining access to sensitive information.
  • You are a contract worker: Companies often ask third parties they work with to sign an NDA. For instance, consultants, vendors, contractors, etc.

Are Non-Disclosure Agreements Enforceable?

NDAs are legally binding agreements; however, the company has the burden of proving an employee violated the contract, resulting in injury to the company. In other cases, an NDA can be determined unenforceable in court, for instance, if it is too broad, it does not consider the employee, the company did not maintain secrecy, the information is not valuable, or a secret or there are unquantifiable damages.

Penalties for Violating a Non-Disclosure Agreement

If an employer can successfully prove you violated a signed NDA that resulted in harm to the company, you may face serious consequences. Penalties can come in a few different forms, but the main two are financial compensation and court injunctions prohibiting the breaching conduct. In other words, you may have to pay punitive damages for the harm you caused to the company, as well as legal fees and other costs associated with pursuing the claim. Penalties typically do not involve prison sentences or jail time.

Speak to an Attorney

While many NDAs are binding contracts, situations may arise that make you wonder how to break a non disclosure agreement. Some NDAs may not be fully enforceable because of state law or other policies that would make it difficult for a court to uphold. Whether you are a business protecting your interests or a worker in dispute over an NDA, contact Aegis Law Firm. Our Orange County employment law attorneys can discuss your options in a free consultation. Call (949) 379-6250 or send us a message online today.