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Protecting businesses and employees with NDAs

| Oct 22, 2020 | Employment Law for Employers |

Nondisclosure agreements, as the name implies, aim to prevent the sharing of some information by one or more parties.

Companies commonly leverage NDAs to protect sensitive data that, if provided to a competitor or another party, may result in harm to the business. Contractors, vendors and supplies often sign nondisclosure agreements with companies. Many employees do as well.

Employee access to confidential information

Employees in sales, marketing, product development, finance and more must have access to sensitive and confidential company information. Pricing strategies, new product concepts, revenue and more logically deserve to be protected from external sharing.

The Society for Human Resources Management indicates that companies consider crafting nondisclosure agreements for employees that clearly define what information should be kept secret. Keeping to a defined scope may help to offset concerns that an NDA attempts to prevent employees from calling out acts of wrongdoing.

Whistleblowers and NDAs

A report by the Harvard Business Review explains that many nondisclosure agreements have been challenged in recent years for allegedly attempting to silence whistleblowers and stand in the way of reporting harassment, discrimination or other actions.

Some NDAs include provisions that require people who have accepted a settlement from a company to remain silent about the events leading up to the settlement. Again, these provisions have led to allegations of companies trying to avoid reports of illegal or unethical behaviors from getting out.

Some courts have ruled against companies and in favor of employees when the terms of nondisclosure agreements have been deemed to be unreasonable. Other courts have nullified some NDAs for this reason.