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The pros and cons of NDAs for employees

On Behalf of | Feb 11, 2020 | Business

Over the past couple of decades, more and more companies have required their employees to sign contracts that prevent them from sharing company information with other parties. Referred to as nondisclosure agreements or confidentiality agreements, these contracts attempt to protect sensitive data, strategies and more from competitive or other hands. While this reason for using an NDA makes sense, many believe that nondisclosure agreements can at times be misused or inappropriately drafted. 

As explained by the Harvard Business Review, more than one out of every three people who are employed are bound by some form of an NDA today. These contracts have been linked to negative events like the silencing of victims or witnesses of harassment and discrimination. Lawsuits have been filed in response to employees’ accounts of alleged illegal behavior despite the fact that the Civil Rights Act protects a person’s right to make such reports or to comply with investigations regarding such reports. 

A newer law, the Defend Trade Secrets Act directly provides approval for employees to engage in whistleblowing activities regardless of the inclusion of or reference to any sensitive information. 

The Society for Human Resource Management indicates that a careful review of nondisclosure agreements is necessary prior to their use. Keeping the scope of these agreements more narrow and focused may benefit employers and employees alike. Similarly, ensuring that NDAs are signed upon commencement of employment is recommended. Finally, companies may want to review which employees truly need to sign a nondisclosure agreement. Keeping the use of such contracts confined to those employees who have access to protected information is important.