A nondisclosure agreement, also known as an NDA, is a contract that requires someone to protect trade secrets and other confidential information. Often, it is a requirement for a job applicant to secure employment. The NDA restricts the disclosure of certain information during employment and for a period after the end of the employment relationship. As a business or corporation, it is crucial to put in place a well-drafted NDA that courts will uphold. The experienced New York corporate law lawyers at Klapper & Fass are also litigators with insight into how courts will interpret nondisclosure agreements. If you are a business owner, your NDA should be tailored to protect your interests without being so broad that a court will invalidate it.Drafting a Nondisclosure Agreement
You may need a nondisclosure agreement if your business gives employees access to sensitive or confidential, proprietary information, and you do not want this information to end up in the wrong hands, such as with your competitors. The nondisclosure agreement is a contract in which the employee promises not to divulge sensitive information acquired through employment in exchange for a job and salary or other consideration.
There must be a bargained-for exchange for the agreement to be valid. If the nondisclosure agreement is not signed when the employee is being hired, such that the job or salary serves as consideration, an employer will need to provide some other consideration, such as a bonus or promotion, to make the agreement valid. In some cases, the employee also promises not to work for competitors for a short period of time, so the confidential information can be further protected.
The treatment of these agreements varies according to the state in which they are devised. New York courts, for example, take a very strict view of nondisclosure agreements because the state has a strong policy against preventing people from plying their trade and earning a living. In New York, any restraints against disclosure need to be no more than what is required to protect your legitimate interests. Generally, legitimate interests include protecting against the misappropriation of trade secrets, the misappropriation of customer lists, or competition by a former employee whose services were unique. The restriction must be short-lived and restricted to a particular geographic region.
The information to be protected needs to be genuinely confidential. That means it is information that you have taken reasonable steps to protect against unauthorized access. Something generally known within the industry, for example, is not confidential information even if your employee learned it from you. Similarly, if you freely disseminate certain information to clients without nondisclosure agreements, that information is not confidential for the purpose of an employee's nondisclosure agreement.
How are nondisclosure agreements enforced? In most cases, you will need to send the person who is breaking the nondisclosure agreement a demand or cease and desist letter that explains how the employee has breached the terms of the agreement and demands compliance with it. The letter should warn that if compliance does not occur, a lawsuit for injunctive relief and damages will be brought. If the person breaking the agreement fails to comply, it may be necessary to bring a lawsuit to enjoin or prevent the defendant from further using or disseminating the confidential information and to reover any damages that were incurred.Retain a New York Lawyer for Your Corporate Law Needs
Our New York corporate law attorneys understand how to draft a valid nondisclosure agreement. The litigation lawyers at Klapper & Fass have offices in White Plains and Manhattan. We serve the five boroughs of New York City as well as Suffolk, Westchester, Nassau, and Rockland Counties. Our attorneys also represent clients in Connecticut, Florida, Pennsylvania, Texas, California, Michigan and other states around the country. Contact us at 914.287.6466 or use our online form to set up an appointment