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Nondisclosure agreements and employees

On Behalf of | Jul 27, 2020 | Business Law |

Every business has some data or information that it would not want to be publicly shared. This may include information that could compromise the company’s competitive position should it become known, such as product development details or pricing structures.

Employees naturally may need or have access to sensitive company materials to effectively do their jobs. For this reason, many employers request that new hires sign nondisclosure agreements.

Important elements in a nondisclosure agreement

As explained by Forbes, clarity in a nondisclosure agreement is essential. The contract should clearly outline what information is deemed confidential and within the scope of the agreement. An NDA may be in effect for a set period of time rather than indefinitely and the duration should be noted in the contract. Conflict resolution preferences, such as mediation or arbitration, may also be included.

Nondisclosure agreements with vague terms open themselves up to being invalidated or failing to provide the full protection desired.

Issues with NDAs and employees

According to the Harvard Business Review, employee NDAs have been accused of all but masquerading as gag orders, preventing workers from reporting illegal activities. By silencing employees on these sensitive issues via nondisclosure agreements, some businesses have given these otherwise useful contracts a bad reputation.

Another critique of some NDAs is that they may limit a person’s future employment by stipulating that they cannot work in a certain field after terminating their employment. These clauses may attempt to prevent unfair competition, but caution should be exercised to ensure these parts of nondisclosure agreements do not extend too far. As with vague terms, this type of issue may weaken the overall contract.