As an employer, protecting your business’s intellectual property, trade secrets and proprietary information is critical. One essential tool that you can use to your advantage is a nondisclosure clause in your employment contracts.
A nondisclosure clause, often called a confidentiality clause, is a provision in an employment contract in which an employee agrees not to disclose information about the company’s confidential and proprietary information. This can encompass a wide range of data, from client lists and marketing strategies to product specifications and production methods.
Designing a nondisclosure clause
When crafting a nondisclosure clause, specificity is critical because being specific enhances the protection it provides your business. Rather than simply stating that the employee must keep all company information confidential, you should clearly define what constitutes confidential information in the context of your business. Providing examples can help clarify proprietary information and minimize the chance that the employee will state they didn’t realize that something important was confidential.
It’s also essential to establish the duration of the nondisclosure agreement. This term should be reasonable and justified by a legitimate business interest. Typically, a term that lasts as long as the information remains confidential is considered reasonable.
Understanding the legal considerations
Employing a nondisclosure clause also requires careful consideration of legal implications. The laws governing these agreements vary by state, so ensuring your contract aligns with local laws is crucial. It’s usually best to have a legal professional review these documents so you can be sure that they’re up to par. The clause should also be reasonable in scope. If a court determines that the clause is overly broad or burdensome to the employee, it could be deemed unenforceable. You must ensure the clause is legally sound and doesn’t infringe upon the employee’s rights.
Taking steps to protect your company is critical, so be sure you understand the full impact of the employment contracts you have members of your team sign. It may behoove your company for you to have the basic contract and any modifications reviewed periodically in order to better ensure that they remain in-bounds and enforceable as a result.
