Use of NDAs with employees

| Jul 28, 2020 | Business Litigation |

Regardless of industry, market or size, a business understandably needs to protect its competitive position as part of ensuring its success. One way management teams may do this is by preventing sensitive information from getting into the wrong hands.

Nondisclosure agreements, also referred to as confidentiality agreements, aim to empower businesses to safeguard their sensitive company data.

Employee access to confidential information

Employees in a variety of positions commonly have access to information that the employer would not want to have shared externally. For this reason, many employers have adopted the routine use of requiring their workers to sign NDAs.

Unfortunately, some provisions of employer-employee nondisclosure agreements have opened the door to serious concerns. According to the Harvard Business Review, may NDAs have resulted in essentially quieting employees from exposing wrongdoing. Provisions viewed as gag orders or hush orders may lead to issues in enforcing contracts.

Other elements of NDAs may end up limiting an employee’s future employment opportunities by preventing them from accepting work in a certain industry or geographical area.

Discretion when using NDAs with employees

As explained by the Society for Human Resource Management, business owners and managers should judiciously use nondisclosure agreements with their workers. One important component to the use of these contracts with employees relates to the timing of when the contracts are signed. NDAs may be best used if created as part of a new hire’s onboarding process, rather than at the time of separation.

Employers should also ensure the scope of all NDAs with employees remains focused on protecting sensitive information but not on banning whistleblowing.

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