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Confidentiality Agreements in Michigan: When an NDA Goes Too Far
Most people sign confidentiality agreements the same way they accept a software terms-of-service update: quickly, under some degree of pressure, and without reading every line. At the start of a new job, an NDA feels like paperwork, not a legal commitment with real consequences. At the end of employment, when you are being offered severance and someone is waiting across the table with a pen, the pressure is even higher.
Confidentiality agreements are common, and that familiarity breeds a dangerous assumption: that because your employer put something in writing and you signed it, you are permanently bound by every word of it. Michigan courts do not see it that way. A contract, including a confidentiality agreement, is only enforceable to the extent it is reasonable and does not ask you to do something the law prohibits.
There are meaningful limits on what an NDA can require you to keep quiet about. Employers who push past those limits may find that the agreement they handed you is worth considerably less than they think, and that their attempt to enforce it creates its own legal exposure. Understanding where those limits are is the first step in knowing whether the agreement you signed, or are about to sign, is something you actually have to live by.
What Is a Confidentiality Agreement and Why Employers Use Them
A confidentiality agreement, sometimes called a non-disclosure agreement or NDA, is a contract that restricts what you can share with people outside the company. This can appear as a standalone document, a clause buried in your employment contract, or a condition attached to severance pay.
Employers have legitimate reasons to use them. Businesses invest real money in developing proprietary processes, client relationships, pricing strategies, and product plans. Michigan's Uniform Trade Secrets Act (MUTSA) gives employers legal tools to protect genuinely confidential business information, and NDAs are one of those tools.
The problem arises when confidentiality provisions are written so broadly, or used in such a targeted way, that they cross from protecting business interests into controlling employees. There is a meaningful difference between:
- Asking you not to share a client list with a competitor, and
- Asking you not to tell anyone that your manager sexually harassed you
What Michigan Law Says About NDAs
Michigan courts evaluate confidentiality agreements by looking at whether the restriction is reasonable in scope, duration, and subject matter. A provision that is overbroad, indefinite, or designed to prevent disclosure of legally protected information is vulnerable to being struck down or limited by a court.
Michigan's Uniform Trade Secrets Act governs the protection of actual trade secrets, defined as information that derives economic value from not being generally known and that is subject to reasonable efforts to keep it confidential. If what an employer is trying to protect does not meet that definition, MUTSA offers less cover than many employers assume.
Federal law adds another layer. The National Labor Relations Act (NLRA) protects employees' rights to discuss working conditions with each other, including wages, hours, and treatment by supervisors. An NDA that prohibits those conversations is almost certainly unenforceable against non-supervisory employees. Title VII of the Civil Rights Act and Michigan's Elliott-Larsen Civil Rights Act (ELCRA) both protect employees who report discrimination or harassment, and those protections cannot be contractually waived.
Five Ways an NDA Can Go Too Far
It Tries to Silence You About Illegal Conduct or Discrimination
An employer cannot use a confidentiality agreement to prevent you from disclosing workplace discrimination, sexual harassment, wage theft, or other unlawful conduct. Michigan's ELCRA, alongside Title VII at the federal level, protects employees who speak up about these issues. A contract provision that purports to override those protections is against public policy and unenforceable.
It Prohibits You From Filing a Charge With the EEOC or Michigan's MDCR
You cannot sign away your right to file a charge with the Equal Employment Opportunity Commission (EEOC) or the Michigan Department of Civil Rights (MDCR). These are federal and state agencies with independent enforcement authority. An NDA that purports to waive your right to contact them or cooperate with their investigations is void on its face.
It Prevents You From Cooperating With a Government Investigation
Related to the above: no private contract can stop you from responding to a subpoena, participating in a government audit, or cooperating with law enforcement. Employers sometimes include sweeping language that could be read to prohibit this. Courts do not enforce those provisions.
It Covers Information That Was Never Actually Confidential
For an NDA to protect information, that information has to actually be confidential. If your employer defines "confidential information" so broadly that it includes publicly available data, general industry knowledge, or skills you brought to the job yourself, a court may refuse to enforce that portion of the agreement. An NDA cannot be used to strip you of your own professional expertise.
It Is So Broad in Scope or Duration That It Is Unreasonable on Its Face
A confidentiality agreement that runs indefinitely, covers every piece of information you ever encountered, and applies everywhere in the world is likely unenforceable. Michigan courts require that restrictions be reasonable. Overly broad language is a signal worth flagging, particularly before you sign.
NDAs in Severance Agreements: A Closer Look
When a confidentiality agreement shows up inside a severance package, the stakes are higher and the pressure to sign is real. You have just lost your job. There is money on the table. Someone wants an answer quickly. This is exactly the environment in which people sign documents they later regret.
A few things worth knowing before you sign any severance agreement:
- If you are 40 or older, the Older Workers Benefit Protection Act (OWBPA) requires that you be given at least 21 days to consider an agreement that includes a waiver of age discrimination claims under the ADEA, and at least 7 days to revoke after signing. Any agreement that does not include this language is not a valid waiver of those claims.
- Look for carve-outs. A well-drafted severance agreement should preserve your right to file government charges and cooperate with agency investigations, even if it restricts other disclosures. If those carve-outs are missing, that is worth flagging.
- Read the definition of "confidential information" carefully. The broader that definition is, the more important it is to understand what you are agreeing to before you accept the check.
- Retaliation language matters. If you previously raised concerns about discrimination, harassment, or safety violations, an NDA in your severance agreement deserves especially careful scrutiny. Signing it under those circumstances does not eliminate the underlying legal issues.
The Defend Trade Secrets Act and Federal Whistleblower Carve-Outs
The federal Defend Trade Secrets Act (DTSA) actually works in employees' favor in one important respect. It requires that any NDA or confidentiality agreement include a notice informing the employee that they cannot be held liable for disclosing trade secrets to government officials or an attorney in the course of reporting a suspected violation of law.
This immunity provision means that even if you sign an NDA, federal law already carves out space for you to report suspected criminal conduct or regulatory violations to appropriate authorities without facing liability for trade secret disclosure.
Employers who fail to include this notice in their agreements lose the ability to recover certain remedies, including exemplary damages and attorney fees, if they later sue for trade secret misappropriation. For employees, the practical takeaway is this: the federal law already protects some disclosures regardless of what your NDA says. Knowing that protection exists matters.
Some Things Cannot Be Made Confidential
An NDA is a contract, and like any contract, it operates within limits the law sets. Employers have real interests worth protecting, trade secrets, client relationships, proprietary technology, and Michigan law respects those interests. But the law draws a clear line when confidentiality is weaponized to conceal discrimination, suppress reports of harassment, or prevent employees from exercising rights that statutes specifically preserve for them.
That line is not a technicality. It reflects a considered judgment that some information belongs to the public interest, not to the party with better lawyers at the negotiating table. Courts enforce it accordingly.
Talk to Scott Before You Sign Anything
If you have been handed a confidentiality agreement as part of a severance package, a settlement, or even your initial hiring paperwork, and something about it concerns you, Scott Batey can review it with you. He has been handling Michigan employment matters since 1996, and he has seen the full range of what employers put in these agreements, including provisions that go well beyond what the law permits.
Call Scott directly, or reach out by email, to schedule a time to talk.