What is a Non-Disclosure Agreement?

Confidentiality agreements limit the release of some employment-related information.

In a nutshell, companies use non-disclosure agreements, which are also known as confidentiality agreements, to protect their intellectual property, mostly trade secrets and customer lists. Freelancers and remote workers almost always sign NDAs, since they have unsupervised access to the company’s trade secrets. Many companies bundle non-disclosure agreements with non-competition agreements, which limit a person’s right to work in that industry outside that company.

For example, when Jerry starts at XYZ Law Firm, his boss might ask him to sign a non-disclosure agreement and a non-competition agreement. The NDA prohibits Jerry from publicizing client names, and the NDA prohibits Jerry from working at another area law firm within a year after he leaves XYZ.

Many people sign NDAs like they click the “I agree to the terms of service” boxes on websites. They do not read NDAs or even scan them. That approach is understandable. Most new employees do not want to make waves when they start new jobs. That approach is also dangerous. Violating even an obscure NDA provision could mean a big lawsuit. So, before you sign anything, always ask a Norcross business law attorney to review it.

NDA/Confidentiality Agreement Nuts and Bolts

A few companies use custom-created NDAs that a Norcross business law attorney wrote. But most companies use boilerplate NDAs, which are available on the internet. Regardless of the source, the agreement usually has four basic parts:

• Participants: Many companies are conglomerates that consist of five or six companies, each of which controls a specific operational aspect. Not all companies have a right to protect all information.
• Definition/Exclusion: NDAs cannot assume that everyone knows what a phrase like “confidential information” includes. Likewise, the agreement should also define what information is not
• Permissible Use: These provisions are especially common in “soft” NDAs. ABC might only care if someone leaks confidential information to a competitor.
• Time Period: Drug companies often use these provisions. When a certain pill hits the market, and the company has the exclusive power to sell it, the company zealously protects confidential information. When cheaper generic versions become available, the company might not care.

Since we used the law firm example above, we should cover the difference between confidential and privileged information.

Any company could designate confidential information, but privileged information designations usually only apply to doctors, lawyers, and other professionals. Companies decide what information is confidential, at least in most cases. An outside body, usually a court or a licensing board, determines what information is privileged.

Enforcement Issues

Frequently, NDAs are overly broad. Legally, confidential information is usually information that has value to someone else. There’s a difference between embarrassing and confidential information.

Moreover, NDAs are often unenforceable contracts of adhesion. These non-negotiable “take it or leave it” instruments are not technically contracts. To avoid this problem, many companies encourage employees to obtain legal counsel. Attorneys usually have stronger negotiating power than new employees.

Rely on a Gwinnett County Business Law Attorney

NDAs and other sign-on documents are quite complex. For a consultation with an experienced business lawyer in Norcross, contact Zimmerman & Associates, Attorneys at Law. We routinely handle matters in Fulton County and nearby jurisdictions.