Employee Non Disclosure Agreements (NDAs) in Massachusetts
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If you are asked to sign an employment contract, it will very likely include a nondisclosure agreement, or an NDA. These provisions restrict you from using or disclosing the employer's trade secrets or other confidential information outside of your work for the company.
An NDA that protects a company's confidential information is a common type of agreement. This kind of NDA is, for the most part, enforceable. NDA's that attempt to prevent disclosure of sexual harassment or harassment settlements are discussed separately. There are a few things you should understand before signing an NDA to protect your employers confidential business information. We have also provided some questions you may want to ask an employment lawyer before signing. |
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What Is a Non Disclosure Agreement
Non disclosure agreements, or confidentiality agreements, protect the employer's trade secrets as well as other confidential information that may not meet the legal definition of a trade secret.
The types of information that may be considered confidential include customer lists, financial information, and technical information. Typically you will be asked to agree not to use or disclose that information outside of your employment. You will also be asked to agree to return any company information or property at the end of your employment and not to use or disclose it after leaving the company.
If information meets the legal definition of a trade secret, you must protect it even if you don't sign an NDA. What the NDA adds is protection for proprietary information that may not rise to the level of a trade secret.
The types of information that may be considered confidential include customer lists, financial information, and technical information. Typically you will be asked to agree not to use or disclose that information outside of your employment. You will also be asked to agree to return any company information or property at the end of your employment and not to use or disclose it after leaving the company.
If information meets the legal definition of a trade secret, you must protect it even if you don't sign an NDA. What the NDA adds is protection for proprietary information that may not rise to the level of a trade secret.
Non Disclosure Agreements (NDA) Enforcement
An NDA is a legally binding agreement. It is not subject to the same scrutiny as a non compete. This is because it only restricts you from using information and not from competing in general.
The agreement will usually state that the employer is entitled to injunctive relief if you breach it. This means they can ask a court to issue an immediate order requiring you to stop using or disclosing the confidential information. They can also seek money damages if the use or disclosure has caused them financial harm.
Sometimes the agreement will include a "liquidated damages" provision. This is a specific amount that the employee agrees to pay in the event of breach. Courts will enforce these provisions if they are reasonable and if actual damages would be difficult to prove.
Your agreement may also include an attorneys' fee provision. This will state that if the employer proves a breach, you will be responsible for their legal fees and expenses.
The agreement will usually state that the employer is entitled to injunctive relief if you breach it. This means they can ask a court to issue an immediate order requiring you to stop using or disclosing the confidential information. They can also seek money damages if the use or disclosure has caused them financial harm.
Sometimes the agreement will include a "liquidated damages" provision. This is a specific amount that the employee agrees to pay in the event of breach. Courts will enforce these provisions if they are reasonable and if actual damages would be difficult to prove.
Your agreement may also include an attorneys' fee provision. This will state that if the employer proves a breach, you will be responsible for their legal fees and expenses.
NDA Reasonable Time Period
Unlike non compete agreements, there is not a specific requirement that the NDA be limited to a reasonable amount of time. Many contain no end date at all. That is probably acceptable under the law. At the same time, if years have passed since you left employment, the proprietary or business information the company sought to protect may no longer be valuable.
Non Disclosure Agreement and Non-Confidential Information
Though employers have broad leeway in protecting their information through a legal contract, there are some things they cannot protect. These include:
- Information that is in the public domain already when you sign the agreement.
- Information that later becomes public, so long as you were not the one who made it public.
- Information that is common knowledge in a field or industry.
- Information that you knew before your employment from some source other than your employer.
Non Disclosure Agreement: Questions to Ask an Employment Lawyer Before Signing
Before you sign an NDA, it is a good idea to have it reviewed by a lawyer. Some questions you should ask include:
- How broadly is "confidential information" defined in the agreement and what activities does it likely cover?
- Does the agreement specifically exclude information in the public domain or information you know from other sources?
- Is there a liquidated damages clause in the agreement?
- Is there a time limit on the non disclosure obligation?
- Does the agreement specifically define what information you have to return upon termination?
- What are the enforcement mechanisms in the agreement. For example, does it require arbitration? Does it make you responsible for attorneys' fees if they prove you breached the agreement?
How Our Employment Lawyers Can Help
We can help you review your employment agreement to make sure you are making an informed decision and protect your interests. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
