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An employee non-disclosure agreement is a legally-binding contract that restricts what information the signing parties can share. It can also be titled as a confidentiality agreement, a proprietary information agreement, or simply an NDA. Companies use one to keep trade secrets, customer lists and business plans away from competitors. The employee non-disclosure agreement template below is ready to fill in online, and you can also browse another non disclosure agreement template if your situation is different.
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A company can use an employee non-disclosure agreement with an employee when sensitive information needs to be protected. Companies can use a non-disclosure agreement to protect confidential information, trade secrets, and customer lists. Having an employee sign this agreement helps ensure that company information stays protected.
Here are a few common moments when a business reaches for an employee NDA:
An employee non-disclosure agreement can also set expectations about what happens when the agreement is broken. When an employee signs a non-disclosure agreement, they should know what can happen when they share information that is protected.
A non-disclosure agreement makes it easier for both parties to understand what can and cannot be shared. As new business developments are made, an NDA will define those terms and indicate when information can be shared or made public to protect the business.
When you work out what to include in an employee non-disclosure agreement, start by listing the trade secrets and company information you want to protect. Businesses hold many kinds of information that help them succeed, and the agreement can name each kind of confidential information.
The definition of confidential information in an NDA can cover items such as:
Non-disclosure agreements also protect clients, and customer lists can be included to keep them safe. It is also an important consideration for other companies to not have a customer list.
An agreement will also cover exceptions and exclusions to confidential information. This also covers if a court finds an aspect of the agreement unenforceable and negates that part of the contract.
An employee non-disclosure agreement is built from short sections, and each section has its own job. Some sections define the confidential information, others set the time period or the state, and a few handle what happens if something goes wrong.
This aspect of the agreement defines confidential information and what company information is protected by the agreement. This information can include but is not limited to, trade secrets and customer lists. Company information that the company wants to restrict access to is included in this section.
This section of the agreement lays out the exclusions to confidential information. These exceptions include information that is publicly known, known by the employee before the company disclosed it, what was learned from the employee through other means, and what is revealed with company permission.
This section covers what the expectations of the employee are with regards to company information. This may also require employees to have other people sign non-disclosure agreements when necessary.
This section of the agreement covers how long the agreement will last. In some cases, trade secrets can never be shared. In other cases, the contract is over at a specified date.
This section of the agreement covers defining the relationship between the two parties, either as employee and employer or an independent contractor.
This section of the agreement covers what will happen if the contract is deemed invalid or unenforceable by a court. NDAs can be made void due to vagueness or confusion about what it covers. When drafting an NDA, you will want to cover all the terms and conditions that the NDA applies to without infringing on other rights.
This aspect of the contract covers how this contract applies to other contracts that the parties have signed. It also establishes how the agreement will be amended.
This part of the agreement establishes that signing this contract is not waiving any prior rights of the employee.
This section covers how binding the contract is and who else may be impacted.
This section covers what the employee will need to do in the event of a breach of contract. This can include paying fines or covering legal fees for the disclosing party.
This section covers the state that the contract is enforceable. Every state has unique laws about employee non-disclosure agreements and before drafting or signing one you should be familiar with what is enforceable.
This section of the agreement covers that the employee agrees to cover any losses or damages. This section can be enforceable after the non-disclosure agreement expires.
These steps follow the FormsPal employee non-disclosure agreement template, one part of the form at a time. If you downloaded the PDF, you can type straight into the blanks with the PDF editor, and the same entries apply when you fill in the form online.
The screenshots under each step show the FormsPal Employee Non-Disclosure Agreement template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Once the form is complete, a few simple steps turn it into a working agreement. Take your time at this stage, because both parties will rely on the finished copy later on.
If someone else sends you a long NDA, you can ask questions about it in Chat with PDF before you sign.
People often ask the same few things about an employee NDA. Employers wonder what it protects, whether a signature can be requested at any time, and what counts as a trade secret. Employees wonder about the risks, what the agreement means for them and whether anything can be changed.
Without an employee non-disclosure agreement, a company has less protection for its confidential information. Asking employees to sign one may feel like a sign of distrust, but many employees see it as a normal step that keeps expectations clear.
An agreement that lists what is protected helps a company keep its intellectual property away from competitors. It also gives both sides a shared understanding of:
Without one, a business may spend more time and money working out how to protect its information after a problem appears. A written agreement makes those conversations easier.
The Defend Trade Secrets Act is a federal law that standardized the definition of trade secrets. It also establishes the consequences for someone misappropriating or stealing a trade secret.
With the passing of this act, the definition of trade secrets became uniform to cover tangible and intangible company data and information. To be a trade secret, the object or procedure must be business-related that gives the company a competitive edge. This definition is still vague but it does set boundaries as to what is expected to be a trade secret and what is not covered.
It also must increase the overall value of the current market. A good example of a trade secret is Coca-cola’s secret recipe because it is not publicly known and gives the company a competitive edge. Any company secret that is not publicly known is a trade secret and can be covered by an NDA.
This act also covers the definition of misappropriation. Misappropriation is when a trade secret has been obtained through improper or illegal means. When this happens, a lawyer can be used to find a remedy.
Requiring an employee to sign an NDA is a standard practice among many industries and businesses. Often, a company doesn’t run into problems when asking an employee to sign an employee non-disclosure agreement. With most contracts, three elements have to be met; the offer, the acceptance, and consideration. Consideration is what makes the contract value to an employee to sign.
Depending on the state that you’re in, a company does have options to get an employee to sign an NDA. For new employees, the consideration to work at that company is the consideration of value for signing the contract.
With existing employees, the consideration for signing an NDA may have to be more thought out. This can come in the form of a pay rise or another incentive. The consideration has to be new in many instances.
As with any contract, the person signing it wants to know what they are agreeing to. With any non-disclosure agreement, expect the employee to read the contract and have questions. Some employees may even want to negotiate the agreement.
Employees can ask to negotiate the NDA but the company does not have to be receptive. Negotiating an NDA can be useful when defining the skills that an employee has and if that skill is already well-known in the industry. Employees will also want to define what they already know in the event of a breach.
General information, not legal or tax advice.
