What to Look For in an Employee Confidentiality Agreement

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What is a confidentiality agreement and why do employers use them? A confidentiality agreement is a contract between an employee and an employer, in which the employee agrees not to disclose or profit from any proprietary information related to company operations.

Confidentiality agreements are legally binding contracts in which one party promises to keep trade secrets and not to disclose secrets without authorization from a superior.

These agreements are usually binding until the private information is commonplace or the receiving party is released from the contract, whichever occurs first. 

Non-Disclosure Agreement Provisions

A confidentiality agreement is also known as a non-disclosure agreement or an "NDA." Confidentiality agreements protect private company information like financial details, business strategies, customer lists, or products and services underway or in development, and prevent employees from communicating or profiting from sensitive information.

In addition to protecting sensitive information, these agreements protect patent rights and avoid issues a confidentiality agreement is broken, the injured party can seek monetary damages or compensation for breach of contract. Most confidentiality agreements also contain a provision that states that all technology or access to this sensitive information should be returned before the end of the agreement or employment, whichever comes first.

 

Confidentiality agreements must determine two times periods: The period of time in which the disclosed information is determined and agreed upon and the period in which the information must be kept secret. If a time period is not specified, there is a greater chance of litigation and judicial review to determine fair and equitable ruling.

 

When Confidentiality Agreements Are Signed

In most cases, confidentiality agreements are signed when an individual is first hired and are valid through the termination of their employment or, in some cases, a period of time after employment ends. 

However, in some cases you may be required to sign a confidentiality agreement prior to an interview. Companies do this for a few reasons. First, they might not want you to share their interview questions or their recruiting practices. Or, they might be planning to discuss company issues or problems that they want your opinion on, but don't want to become public. In other cases, the interview might include the disclosure of trade secrets.

What to Look for in a Confidentiality Agreement

Some confidentiality agreements are harmless and are completed as a formality, though you should carefully evaluate before you sign a non-disclosure agreement specifying:

  • That you can’t work for a competitor for one to two years
  • That anything you conceived of while employed is the property of the company, even if you did it on your own time
  • That you give up your right for a trial if there is an issue with the contract

It's important make sure that you aren't agreeing to anything that would hinder your ability to find another position should your job not work out with one company.

 In all cases, be sure to read the confidentiality agreement thoroughly before signing and don't be afraid to ask for specifics about what the agreement would mean for you.

Consider Getting Legal Advice

A confidential agreement is legally binding, so consider getting legal advice before signing a document that can impact your future employment.

Also Known As: confidentiality contract, non-disclosure agreement, mutual confidentiality

Examples: 

  • Amanda signed a confidentiality contract when she started her software development position at XYZ company.
  • Per the non-disclosure agreement he signed, Richard was required to return his laptop that had VPN access to his company's sensitive documents.

Related Articles: Non-Compete Agreements | What is an Employment Agreement? | What to Consider Before Accepting a Job Offer