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Enforcing non-disclosure agreements

On Behalf of | Jan 25, 2019 | Business Transactions And Litigation |

Hiring a new employee is a sure sign of a business’ progression. At the same time, it also may come with a certain degree of trepidation given the amount of trust that must be placed on a new hire. It is understandable that business owners in Westminster may be hesitant to divulge their companies’ important details with new people; at the same time, a new employee may not be able to perform the functions of their job correctly without such information. A confidentiality (or non-disclosure) agreement might solve this dilemma. 

Per the Cornell Law School, an NDA is a contract a company enters into with either a partnering organization or an individual employee to guarantee the security of its proprietary information. Such an agreement stipulates that any information designated as a “trade secret” cannot be shared without the company’s permission. Given the importance that proprietary information plays in helping a business maintain its place in its respective market, it is little wonder that trade secrets are treated with such importance. 

Oftentimes, however, employees might use the information they have gathered from their time with an organization to further their own careers. If that organization attempts to enforce an NDA that it has with the employee, they may claim that the agreement hinders their ability to compete in the job market. Section 16600 of California’s Business and Professions Code states that a company cannot enforce an agreement that prohibits one from engaging lawfully in other business endeavors. The key for employers who want to impose NDA’s., then, is to ensure that the language such contracts include is not prohibitive to future career growth. Such an NDA might allow an employee to seek other opportunities, yet restrict the details that can be shared once they have left. 

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