Creating an Employee Nondisclosure Agreement

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According to Inc.com, non disclosure agreements are contracts between two parties that limit the amount of material or knowledge that can be shared to third parties. They can be customized to fit each company’s unique needs.

You’ve probably heard of these documents existing in the business world, but they are useful in any situation where privacy is paramount. In Hollywood, for example, many celebrities have their house keepers, chauffeurs and gardeners sign confidentiality agreements to protect their privacy. Tom Cruise’s famous non-disclosure agreement would have fined any of the house help an 8-figure sum for spilling any private information to tabloids.

Maybe you’re not a star of the silver screen, but you can still have plenty of juicy information. Perhaps your company has just designed a revolutionary type of shoe and you need to consult with a fabrication shop before you can decide if you want to go to market with the new shoe. You’ll probably want to have the fabrication shop workers sign non disclosure agreements to ensure that they don’t end up spilling your hard-won secrets to competitors.

If you’re looking to craft the perfect employee nondisclosure agreement, here are a few tips.

Don’t Be Afraid to Be Broad

Chances are that your business has some information in just about every department that you want to keep in house. Do not include actual confidential information in the agreement but use wording such as “Confidential information can include any and all operations, procedures and techniques used to create X product.” Consult with department managers and, of course, your lawyers while crafting the agreement to make sure it is specific enough to protect the right information without excluding anything.

Information Doesn’t Expire

It is conceivable that your company could come up with a proprietary process or technology that could still pay dividends 20 years down the line so make sure that your confidentiality agreement can stand up indefinitely. Many non-disclosure agreements cover the entire term an employee is with the company plus five years.

Exceptions

Inevitably there will be exceptions to any employee nondisclosure agreement. Perhaps your employee will need to consult with the fabricators before getting the widgets into production. Outline when exactly the information may be shared and under what conditions. If the employee must have the fabricators sign a nondisclosure agreement, make that clear in the agreement.

Employee nondisclosure agreements are the safest way to protect your business’ valuable technology and processes from leakage to competitors. Make sure you have one in place for each employee to sign before beginning their employment with your firm. You’ve worked hard to create those technologies and processes, so it only makes sense to protect them.