In California and throughout the country, there is such a thing in the business industry as a legally protected secret. Many employers ask employees to sign contracts stating they will not share certain information outside the company. Many typically refer to such contracts as “non-disclosure agreements (NDAs),” and breaching such a contract might spark business litigation.
As an owner of a successful California business, you have a right to protect your ideas, trade secrets and ideas that give your company the edge over competitors. Crafting a detailed NDA for your employees to sign can help you avoid legal problems.
Vital information to include in an NDA
Lack of detail, otherwise referred to as being “too vague,” opens the door to legal problems when a current or former employee breaches an NDA. The following list provides details that can help protect your company’s private information, trade secrets and ideas:
- Never leave an NDA open-ended. Include a specific time frame.
- Define (in writing) confidential information versus non-confidential information.
- State the purpose of privatizing certain information. Why is it confidential?
- List all parties relevant to the NDA.
- State specific repercussions for breaching an NDA, including who will pay legal fees if business litigation occurs.
It’s always best to password protect all digital files pertaining to non-disclosure agreements. You may or may not wish to allow electronic signatures. The most important issue is to make sure all relevant parties sign the agreement; otherwise, it causes invalidity issues.
What constitutes grounds for business litigation regarding an NDA?
If you suffer economic damages because an employee has breached an NDA, California law provides recourse through business litigation. The following list includes several examples that might constitute grounds for a lawsuit:
- Your employee has revealed trade secrets or confidential information to a competitor.
- A former worker steals your client list, then uses it to his or her business advantage.
- A former employee creates a product using a protected system, recipe or information that is confidential to your company.
In some cases, there may be grounds for litigation, even if the person in question never signed an NDA. However, if you’re facing a situation where there’s an existing contract and you have evidence to show that the person who signed the agreement has breached its terms, there are options available to help protect your interests.
Always review an NDA before signing
As a California Fortune 500 company owner, you are undoubtedly no stranger to legal documents. Using NDAs as part of your hiring policies can help protect your company’s assets and prevent competitors from gaining access to information that might give them an edge in the industry. Asking someone who is well-versed in business laws to review a prospective NDA helps avoid legal problems down the line.