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Confidentiality disputes can lead to breach of contract claims

When a business brings on a new hire, it is often looking for new energy and new human capital that will help the entity as a whole grow and become more competitive in its market. Upon retaining a new employee, it is not uncommon for a New Jersey business to offer its new acquisition a contract of terms that detail the employee's conditions of employment. One of those terms may be a confidentiality clause; this post will generally address what these clauses are and how they can cause issues in the employer-employee relationship.

A confidentiality clause often requires an employee to keep secret and not share any information about the employer's business. This can include, but is not limited to, trade secrets, product specifications and formulas, operational procedures and others. The purpose of a confidentiality clause is to protect a business from leaked information and increased competition from other entities vying for market shares; for this reason, employers often make their confidentiality clauses endure beyond the end of their employees' terms of employment with them.

When an employer believes that an employee has leaked corporate information in violation of their confidentiality clause, the employer may be compelled to terminate the employee. However, the employee may oppose this move and present their own explanations for why they did not participate in sharing corporate information or why their sharing of information did not violate their confidentiality clause. For example, if an employer seeks to terminate an employee based on the violation of their confidentiality clause but the employee can prove that the information subject to the conflict was public knowledge, then the employer's case may lose considerable strength.

Whenever an employer alleges that one of its employees breached their contract, it is possible for an employment-related dispute to arise. Violations of contractual confidentiality clauses are just one way that this form of commercial dispute can arise and readers with specific questions about this issue are encouraged to speak with their employment law attorneys.

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