Confidentiality Agreement Law: Everything You Need to Know
Confidentiality agreement law deals with contracts signed between two or more parties regarding the handling and protection of confidential information.3 min read
Employment Confidentiality Agreement Laws
Employment confidentiality agreement laws enable an employer and an employee to enter into contracts on the use of confidential, sensitive, or private information that the employee will have access to while working for a company. Generally, employers make confidentiality agreements a requirement of employment. For example, the employer may prohibit the employee from divulging the firm's trade secrets or refrain from talking about the company stock with outsiders.
Enforcement of confidentiality agreements is similar to that of other contracts. Once both parties sign the agreement, its provisions legally bind them. In the event of a breach of a confidentiality agreement, the defaulting party may face financial losses and other legal sanctions. Furthermore, confidentiality agreements usually include enforcement clauses. For example, the agreement may contain a no-litigation clause, meaning that the parties will not sue each other in the event of a violation of the contract's terms.
Limitations of Confidentiality Agreements
However, confidentiality agreements have limitations. An employer cannot force an employee to keep silent about the company's illegal activities. An employee may even face legal charges if he/she tried to hide company violations from regulatory authorities. Essentially, asking an employee not to report violations in a confidentiality agreement renders the contract invalid.
Federal and state whistleblower laws prevent employers from firing employees that report valid company violations to legal authorities. However, the rules also make it unlawful for employees to file false or irrelevant claims against their employer.
Confidentiality agreements protect a company from unauthorized disclosure of business secrets. An experienced lawyer can help you draft, review and negotiate a confidentiality agreement. Your lawyer can also offer sound legal advice on the contract and represent you if disputes arise over the document in future.
A confidentiality agreement also called a non-disclosure agreement, or NDA, is a contract formed by two or more persons or entities to prevent the misuse or unauthorized disclosure of information.
Nondisclosure agreements are also known as confidentiality agreements, secrecy agreements, or CDAs. Employers often require their employees to sign confidentiality agreements as part of the employment contract. In some cases, the employer may need the employee to sign a confidentiality agreement when their work will give them access to sensitive company information.