An Employee Confidentiality Agreement, or as you may have more commonly heard it referred to an Employee Non-Disclosure Agreement (NDA), is often one of the first pieces of paperwork you complete when you start a new job. Depending on the nature of the company itself, this may be a very important contract from your employer’s point of view.
As the employer, your company is hiring you and agreeing to train you and provide information to you that will help make you one of, if not the, most powerful actors within your industry. It is helpful to them and to their business that you be the best and have all of the benefits and knowledge possible. They are investing their time and money into helping you build an in-depth understanding of best practices, skills of the trade, and the best ways to beat out the competition. Unfortunately, if we train our employees the best we can, they should be high commodities just like our products and services. But, companies don’t want their secrets falling into the hands of the competition.
The Employee Confidentiality Agreement, or NDA, that you sign upon accepting an offer of employment is a contract between you and the company itself. They will often times include many of the pieces and aspects listed below, but, as always, know that this list is not exhaustive:
- A statement clarifying that the agreement is in no way a guarantee of employment. There are less than a handful of states in the U.S. that are not at-will employment states. This statement is usually included so that terminated employees cannot use this contract in an employment dispute to argue that the employer guaranteed employment with this contract.
- A statement detailing how or when it is appropriate, if ever, to reveal any trade information or company processes, procedures, or otherwise proprietary information to any body outside the company.
- A statement outlining the responsibilities of an employee regarding proprietary information and trade information if and/or when they have been separated from the company.
- A statement detailing when and how an employee should disclose information protected by the agreement to an attorney or a member of law enforcement.
- Often times, or when an NDA is used alongside or as a Non-Compete Agreement, there will also be details limiting how, when, and where an employee, once separated from the Company, can use the proprietary, trade, or otherwise confidential information they obtained during their employment. This protects the Company and its assets from direct competition from a separated employee. (For example: You may not be able to work in a competitors company for 3 years after the date of separation, within 75 miles of a branch or office of the Company itself, or maybe you can work in the same industry, but a company with a product that doesn’t replace or directly compete with your prior employer.)
Now, this list is not comprehensive because each company and each industry require different specifics of what would be deemed as confidential, proprietary, or even secret company processes. These types of contracts may feel very binding and can seem like not enough to an employer whose product or service is what they believe to have worked hard to build or achieve, but may, alternatively, seem too wide or too constricting to an employee trying to use an entry level position to break into the industry at large.
In many instances, this contract will be extremely binding and there will be few, if any, ways around it. But, there have been many cases, in many different states, where employees and/or their attorneys have argued and won cases by proving that this agreement provides an undue hardship to a separated employee or builds an impossible situation (eg. An employee has worked for their employer for 10 years without building experience in any other industry. They would be required to move an inordinate distance or accept a pay rate dramatically lower than their previous position offered. These circumstances are just an example, but could be used to argue undue hardship.)
Have you ever been asked to sign an Employee Confidentiality Agreement or Non-Disclosure Agreement? If so, let us know how you feel about them. Do employers expect too much of their employees and set too many restrictions? Do you feel like NDAs and ECAs are an understandable and just part of employment?
Employers: Your company’s confidential information is vital to your success. Would you ever consider not utilizing an NDA? If you don’t currently enforce this practice, why not?