Either alone or along with other employee contracts, an employee nondisclosure agreement can help protect your company's important confidential business information.
updated November 22, 2023 · 3min read
Most businesses have at least some information they want to keep private—away from competitors and others—and employees often have access to that information. This is true whether the business is organized as a sole proprietorship, partnership, corporation, limited liability company (LLC), or other type of entity.
If your company has employees, or even one employee, you will want to be sure your sensitive information does not get disclosed by an employee, both during their employment and in the event the employee leaves the company. An employee nondisclosure agreement, or NDA, can help. As an employer, it's important to understand how an NDA works and what it should contain.
Information that a business desires to keep private is often referred to as sensitive, confidential, or proprietary information. Some types also may be referred to as intellectual property, which generally refers to things that are subject to patent, copyright, or trademark protection. Examples of confidential information include:
The exact nature of the information you need to keep secret will depend upon the nature of your business.
There are several ways to approach an employee NDA:
A basic employee nondisclosure agreement may typically include:
The description of the information deemed confidential needs to be tailored to the types of information that relate to your specific business or industry.
The details also may be tailored to what may be negotiated with the particular employee. For example, if the employee will be bringing certain customers to your business, there may be an exception as to confidentiality of that customer information upon termination of employment.
An employee nondisclosure agreement can be very important for your business. To help ensure that your business secrets are well protected—and that the NDA contains everything it needs in order to be enforceable—you may want to prepare the agreement with the assistance of an attorney.
by Edward A. Haman, Esq.
Edward A. Haman is a freelance writer, who is the author of numerous self-help legal books. He has practiced law in H...
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