Savvy businesses often have new employees sign a non-disclosure agreement upon hire. While this is common practice, do you know if your particular non-disclosure agreement is enforceable?
In order for a non-disclosure agreement to be worth more than the paper you print it on, you must ensure that the courts will enforce the agreement if necessary. According to Findlaw, in order for a non-disclosure agreement to be enforceable, it must have reasonableness in both duration and scope.
What is a reasonable duration?
Unfortunately, there is no one-size-fits-all answer to this. It is imperative that you take the time to consider the length of time that information is valuable to your company. It is highly unlikely that all trade secrets your company possesses will be valuable for all eternity. It is even more unlikely that a court will see fit to swear a former employee to secrecy for life.
Essentially, assuming that you intend for your non-disclosure agreement to protect confidential information, you must have a reasonable understanding of how long that confidential information is valuable to your company. Failure to show the courts this understanding may lead to the courts undermining your agreement.
What is a reasonable scope?
Again, this depends on the nature of your business. A general rule is that a court is unlikely to enforce a non-compete agreement in a geographical location where your company does not do business. Naturally, this can be a bit of a difficult subject in the age of the internet.
However, any non-disclosure agreement that the court finds was specifically intended to prevent legitimate business competition will be unenforceable.
