Naperville Attorney Continues Discussion on NDAs: Employment-Related Non-Disclosure Agreements

nda, non-disclosure agreement, Naperville Business LawyerIn a recent post on this blog, I talked a little bit about how a non-disclosure agreement can be a very useful protection tool in business negotiations. I have encouraged many of my commercial clients to develop such agreements when considering mergers and acquisitions, or when seeking private capital funding. In my practice, however, I also get lots of questions about how non-disclosure agreements, or NDAs, can be applied to the employer-employee relationship within a company.

NDAs for Employees and Contractors

One of the most important aspects of an employment-related NDA for business owners to remember is that it can apply to employees and independent contractors. Entering into an NDA does not automatically classify a worker as employee or a contractor; instead, employment contracts and independent contractor agreements often include non-disclosure clauses. A non-contracted employee may be asked to sign a separate agreement as part of the terms of his or her employment.

What Should I Protect?

As a business owner and employer, you certainly have a responsibility to protect your employees. However, if you do not protect your business interests carefully, your employees may not remain your employees for long. Depending on the nature of your business and industry, there are certain types of information you may be inclined to cover in a non-disclosure agreement.

Employee NDAs often restrict the unauthorized dissemination of:

  • Product research and design;
  • Innovative manufacturing processes;
  • Trade secrets or proprietary information;
  • Client and potential client information;
  • Financial records; and
  • Strategic plans and goals for the company.

Additionally, many NDAs clearly state that anything that is produced, developed, or created by the employee or contractor in the scope of employment or contractual work will remain under the ownership of the company, not the individual. This means, for example, the software contractor that you hired to write a proprietary program for your company cannot subsequently sell that same program to your competitor.

Develop an NDA to Meet Your Needs

The exact terms of an employee non-disclosure agreement should be customized based on the type of information to which your employees have access. A blanket agreement covering all types of confidential information may offer you some protection, but many employees may not truly understand the restrictions created by such a document. A stronger non-disclosure agreement clearly designates to the employee or contractor what type of information is not to be disclosed, as well as your expectations for compliance.

If you are a business owner and are considering the implementation of non-disclosure agreements for your employees and contractors, contact an experienced Naperville business lawyer. At the Gierach Law Firm, our attorneys have the legal knowledge and skill to help you draft an NDA and other agreements designed to protect your company both now and in the future.