Diana (Taylor) Servos, principal attorney of ST Legal Group in Deerfield, Illinois, is known to be a proficient employment attorney, well-versed in all aspects of employment law, including non-disclosure agreements (NDAs). A non-disclosure agreement is essential in many areas of business, from hiring to financing and servicing clients. It is important for both employers and employees to have a full understanding of when and how they should be used.
Whether you are an employer who needs a binding, carefully worded non-disclosure agreement drawn up, or an employee who is being asked to sign such an agreement, it is vital that you consult with an experienced employment lawyer to protect your interests. Diana (Taylor) Servos will provide you with accurate information and trustworthy legal counsel.
The Purpose of Non-Disclosure Agreements
NDAs are used to protect confidential information that must, for various reasons, be disclosed to new hires, potential investors, creditors, clients, or suppliers. The legal document provides security to the parties initiating signage that their intellectual property is safe and will not become available to anyone who might do their company harm, such as direct competitors.
Another reason for NDAs is to prevent a company from airing its dirty linen in public by having incidents of sexual harassment or assault disclosed. Employers may require that employees sign an NDA as a condition of employment, as part of a severance package or settlement agreement, or in a personal context.
Types of Non-Disclosure Agreements
There are two primary types of non-disclosure agreements: unilateral and mutual.
- A unilateral NDA stipulates that one party, typically a new employee, agrees not to reveal the business’s trade secrets or other intellectual property.
- A mutual NDA most often involves a joint venture in which both parties agree not to disclose one another’s confidential information.
When are non-disclosure agreements used?
When private information must be shared by business owners — with new employees, potential business partners, or possible investors, any reasonable business owner wants to protect valuable data that, if disclosed, could damage her or his company.
Clearly, leaks concerning trade secrets, like those listed below, could be devastating:
- New products
- Lists of clients (existing or prospective)
- Secret formulas
- Unique manufacturing processes
Undeniably, public exposure of sexual harassment or assault at the workplace will also cause damage to a company’s reputation. Because the stakes may be high for both employer and employee, consulting with a knowledgeable employment attorney is invaluable.
What elements are included in a non-disclosure agreement?
Basically, an NDA is a contract between two or more parties in which the receiving party agrees not to divulge the designated confidential information without prior authorization. The elements spelled out in the agreement include:
- Description of the confidential information (not the information itself)
- Explanation of why the information is being disclosed to the receiving party
- Terms under which the information may be disclosed
- Circumstances in which the information may not be used
- Duration of the agreement
ST Legal Group Constructs Fair, Enforceable NDAs
It should be noted that the NDA must be deemed fair by the court if it is to be upheld. ST Legal
Group will make certain that the NDA is constructed properly so that it is binding but not overly restrictive in a manner that might make the court consider it invalid. Diana (Taylor) Servos will also make sure that all the information mentioned in the NDA is actually confidential, since if it is not specific enough the court might consider the document unenforceable.
Penalties for Violating a Non-Disclosure Agreement
Though NDAs don’t usually specify penalties for parties who violate their terms, the threat of being sued if the contract is broken is clearly present. That threat of losing a large sum of money to the plaintiff and having to pay court costs and attorneys’ fees is usually sufficient to prevent violations.
There have been instances in which an employee violates an NDA with impunity, usually in cases involving sexual harassment or assault. In almost all cases, this occurs because the company believes its reputation will only be further damaged by a lawsuit that will generate even more publicity.
Limits to What Can Be Included in a Non-Disclosure Agreement
Of course, freedom of speech is still protected in this country, so the following are not permitted to be included in NDAs:
- Matters of public record
- Information that an employee has learned from sources other than his/her employer
- Information considered to be common knowledge
- Information about illegal or unethical behavior
The last item bulleted means that an NDA cannot restrict whistleblowing, the practice of informing proper authorities of illegitimate business practices. Whistleblowing is protected by federal law. Also, even in an NDA designed to disallow disclosure of sexual events, an employee cannot be told to refrain from filing a sexual harassment complaint with the Equal Employment Opportunity Commission.
Contact ST Legal Group for Experienced Legal Counsel About NDAs
As you can see from this content, non-disclosure agreements are not as straightforward as they may seem. In fact, this is true of most legal documents and legal matters in general. This is why you need the well-honed skills of Diana (Taylor) Servos to guide you through employment issues based on state, local, and federal law. Whether you are an employer or an employee, she will provide the clarity you need to choose options that are in your best interests and proceed smoothly. Contact our office today to learn more.