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Non-disclosure agreements protect companies

| Apr 8, 2021 | Employment Law |

It seems like it was ages ago when there was a large field of Democrats running for the 2020 presidential nomination. During one debate, Elizabeth Warren welcomed newly official candidate Michael Bloomberg by slamming his company’s use of non-disclosure agreements (NDA). She accused the billionaire’s company of using NDAs to silence accusations of harassment or bias against women in the workplace. Bloomberg was clearly rattled, and it became a signature moment for both candidates.

Bloomberg later followed up by saying that the women spoke of would not be held to their NDA agreements, but the damage was done to his candidacy. Despite their negative reputation, non-disclosure agreements can protect a company’s best interests and have many practical uses beyond covering up hurtful or illegal behavior. Generally speaking, businesses use these agreements to prevent former employees from disparaging the company or tarnish its reputation.

Common reasons for an NDA

It can help protect sensitive information, keeping it out of competitors’ hands. Examples include:

  • Information about pricing, products and services
  • Trade secrets that give the company a competitive edge
  • Special training by the former employer
  • The company’s business practices
  • Knowledge of consensual sexual relations that might harm a company’s reputation

The scope should be modest

Judges will often not allow overly restrictive NDAs that prevent the former employee from working in the same field. The less restrictive the agreement, the greater likelihood of enforcing it. These agreements must also be voluntary. Those with questions about drafting a binding NDA or other contracts will often get the best results if they discuss the details with an attorney who drafts these types of agreements.