Employee Non-Disclosure Agreements (NDAs) are agreements between employers and employees that prohibit either party from disclosing information regarding the other party without permission. They are used in many different industries, including technology, finance, healthcare, and law. If you are considering hiring employees or working with vendors or partners that may have access to your intellectual property (IP) or business, you may want to consider having them sign an NDA to protect your IP and your company. Consider visiting with an experienced business attorney at Von Rock Law in San Francisco, California at (866) 720-0195 to learn more about how you can protect your business while partnering with others.
Understanding Typical NDAs
A typical NDA will cover any type of information that’s considered confidential. This legal document might cover trade secrets, ideas, inventions, research, customer lists, financial data, and other sensitive information. Any information that you use to operate your business could be given to your competitors or outside parties unless you have an NDA in place to protect your legal and financial rights.
Why Are Nondisclosure Agreements Necessary?
There are several reasons why NDAs are necessary. One reason is that employees and contractors often work with proprietary information that belongs to their employer. This includes intellectual and proprietary information such as business plans, product designs, and even source code. Another reason is that some companies require employees to sign NDAs as part of their employment agreements.
What Should an NDA Include?
A strong and effective NDA should protect both parties by clearly defining what each party will keep confidential. It also needs to specify how much information each party has access to and when it expires. Finally, it should outline any penalties for violating the terms of the agreement.
Benefits of Nondisclosure Agreements
NDAs can benefit a company by protecting intellectual property, trade secrets, business operations, and any other confidential information. However, NDAs can also provide the following benefits:
Employee and Independent Contractor Expectations
When an employee or independent contractor understands what they have a legal right to disclose, and not disclose, they can better follow the rules that are established within a nondisclosure agreement. Additionally, clear boundaries can be established that explain the consequences of violating an NDA. Finally, a comprehensive NDA will also provide employees and independent contractors with guidance regarding how to handle sensitive or private information.
Provides Legal Recourse For Employers
Another benefit of an NDA is that it provides an employer with legal recourse if an employee or independent contractor violates the nondisclosure agreement. In fact, pursuing a claim against a violation of an NDA agreement is much easier to pursue than attempting to file a misappropriation of a trade secret claim.
When Does an Employer Have the Right to Enforce an NDA?
As long as an NDA is drafted and executed correctly under the law, an employer will have the legal right to pursue a claim under state law if there is a breach or violation of the contract. If you believe that you may have the right to pursue a claim as a result of a nondisclosure agreement violation, consider contacting the experienced business attorneys at Von Rock Law to ensure your legal and financial rights remain protected.
Are NDAs Enforceable in California?
Nondisclosure agreements are often enforceable in California. The state of California will enforce a nondisclosure agreement as long as it is executed correctly. However, there are two bills that have limited the ability of employers to enforce certain NDAs.
Senate Bill 820
In 2019, the California senate passed SB820, also known as the “STAND Act.” This Act attempted to restrict or ban the use of NDAs in instances of sexual assault, sexual harassment, and/or sexual discrimination in the workplace.
Senate Bill 331
SB820 failed to address other forms of discrimination, including racial discrimination in the workplace. SB331 prohibits certain confidentiality or nondisclosure clauses and agreements to be brought as a result of workplace discrimination based on religion, nationality, race, ethnicity, heritage, disabilities, health conditions, family/marital status, gender, age, sex, or other conditions.
Laws in the State of California can be complex and challenging as they relate to nondisclosure agreements. If you would like to discuss whether your company needs the protection of an NDA, or if you are unsure of whether you have drafted or executed your business’ NDAs correctly, contact the experienced attorneys at Von Rock Law.
Can an NDA Ever Be Unenforceable?
Yes, there are instances in which a nondisclosure agreement could be unenforceable. The following circumstances are examples of when an NDA could possibly be unenforceable.
- The original NDA is drafted and/or executed incorrectly;
- The language within the NDA is either too broad or too restrictive;
- The NDA does not protect confidential information and attempts to protect information readily available or already widely disclosed to the public; or
- The NDA requires illegal activity.
Common Types of NDA Lawsuits
If an employer determines that an employee or independent contractor has violated an NDA, they may have the legal right to pursue a claim in court. The most common types of nondisclosure agreement lawsuits include:
- Breach of fiduciary duty
- Infringement of copyright
- Break of the NDA contract itself as a legally binding document
- Intellectual property right violations
- Misappropriate of trade secret(s)
Contact an Experienced San Francisco Business Attorney To Ensure Your NDAs Are Enforceable
Your business operates successfully because of its unique ability to provide a service or product to consumers. Taking care to ensure that your intellectual property and business operations are kept confidential is an important part of maintaining your edge over your competition. If you have employees or independent contractors that you believe should be covered by nondisclosure agreements, consider visiting our experienced business attorneys in San Francisco, California today at (866) 720-0195. Our legal team can help ensure that your nondisclosure agreements and other employee and independent contractor documents are drafted and executed properly to protect your business.
