Why do employers often get sued over nondisclosure agreements?

On Behalf of | Apr 3, 2020 | Business Law

There are many Augusta businesses both large and small that have their employees sign nondisclosure agreements (NDAs). Many Georgia companies that have their workers enter into these contracts do so to protect their trade secrets or other valuable proprietary information. Some employers have their employees sign such agreements for far more insidious reasons including to deter workers from coming forward about being sexually harassed though. This is illegal.

A common problem with NDAs that results in employees suing their employers is that their scope is too broad.

You, as a company owner, can have your employees sign an NDA to protect your proprietary information. You are required by law to take reasonable steps to protect the secrecy of your proprietary information though. Your NDA shouldn’t be overreaching in scope, but instead, hone in on the specific trade secret that you want to hold confidential.

One thing that you, as an employer, should be cognizant of is local, state and federal laws including employment protections that you must abide by.

You, as an employer, may be required to abide by the Defend Trade Secrets Act (DTSA). If so, then the NDA that your employees sign may have to spell out their right to disclose trade secrets to government agents as a whistleblower.

Federal labor laws may make it illegal for employers to have their workers sign NDAs if it bars them from discussing terms and conditions such as pay with their colleagues.

It may be difficult for you to find qualified employees to work for your company if you’re expecting them to sign NDAs. It’s best if you have a worker enter into such an agreement at the time of their hire. If you don’t, then you may have to offer an employee additional compensation such as a bonus or raise if you want to lawfully have them sign such an agreement.

There’s a lot that goes into drafting nondisclosure agreements. The restrictions that you impose on a worker must be reasonable. This means that such an agreement can’t last indefinitely, have a wide geographic scope or prevent an employee from taking a role in sectors outside of the one that you primarily operate in. An attorney in Augusta can help you draft an NDA that is reasonable and allows you to remain in compliance with all appropriate Georgia and federal laws.