NDA scope and use under scutiny

| Jan 28, 2020 | Firm News |

Over the last few decades, more and more employees have been asked to sign contracts with their employers that bar the employees from sharing company confidential information externally. The use of these nondisclosure agreements was borne out of a legitimate need for businesses to protect their intellectual property or other essential business data. While it is reasonable for a company to want to safeguard its sensitive information, it is equally important that a company not overly restrict an employee to the point that their future employment opportunities become limited.

As explained by the Harvard Business Review, many nondisclosure agreements include provisions that ban a person from working in the same capacity or field upon leaving one specific company. Depending on the nature of a person’s role, education and expertise, this may all but be a mandate for them to never work again unless they dramatically change their career path.

The Society for Human Resource Management believes a balanced approach to the use of NDAs is required. It recommends that these contracts very clearly define what information must be kept confidential and the manner in which any sharing of that information may or may not be allowed. This requires companies to careful identify what truly is unique to them in an effort to avoid an NDA with a scope that is so broad it opens the door to being invalidated.

Nondisclosure agreements should also include provisions indicating that an employee can and should cooperate with any investigation conducted by the Equal Employment Opportunity Commission or that they may disclose details to a federal agency pursuant to a whistleblower complaint.