The Truth Behind the Non-Disclosure Agreements

A lot of companies know they need to have non-disclosure agreements (NDAs) with their employees. So, they hand these agreements to their employees upon on-boarding, along with other hiring paperwork, then file them away in personnel files, and never look at them again until a problem arises.

While having a signed non-disclosure agreement checks off an important legal box, practically speaking it falls far short of educating employees about the importance of maintaining the confidentiality of the company’s proprietary information and trade secrets and the consequences of breaching their NDAs. 

So, the truth behind the non-disclosure agreements is that employees must be able to understand them and know the consequences of violating such agreements.  Therefore, in order to maximize the effectiveness of their NDAs, companies should do the following:

1. Conduct training with employees, explaining what information the company considers confidential.
2. Educate employees on what are possible ways in which they may violate their non-disclosure agreements, such as, for example, posting information on social media or discussing information with employees in an environment where non-employees may overhear confidential information.
3. Have supervisors conduct one-on-one discussions with key employees about the type of confidential information they are working with and the appropriate security measures.
4. Emphasize to the employees the importance of security measures such as not sharing computer passwords, locking sensitive files, and not sharing confidential information using insecure channels of communication.
5. Institute a system where confidential documents are clearly marked as such.
6. Educate employees about the consequences of violating their non-disclosure agreements.
7. Finally, be prepared to punish the violations of the confidentiality agreements and make example out of those employees how knowingly or inadvertently disclosed confidential information, whether the punishment comes in the form of a termination or a lawsuit.

Bottom line is that if your employees do not know what the company considers confidential and are not afraid of the consequences of violating their non-disclosure agreements, they will not be deterred from violating their NDAs, whether intentionally or inadvertently.

Leiza Dolghih is the founder of Dolghih Law Group PLLC.  She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.