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How non-disclosure agreements protect companies

On Behalf of | Dec 23, 2022 | Business Formation |

Employees can do a lot of damage to the company that hired them if they perform their jobs improperly or take certain actions after leaving the organization. Employers often have to carefully protect themselves by adding certain restrictive terms to their employment contracts, especially when workers have access to trade secrets or the inner workers of the business.

Non-compete agreements are one way that businesses prevent former employees from going to work for a competitor or taking certain proprietary information and starting a competing business in the same area. Companies often have to limit such agreements to specific regions and a set amount of time.

Non-disclosure agreements are also an important tool for modern employers. Although many people associate these documents with sexual harassment claims and other forms of corporate misconduct, many businesses use them to protect intellectual property and trade secrets.

Non-disclosure agreements keep company processes private

A non-disclosure agreement can prevent a worker from taking recipes or client rosters that they have access to while working at your company and then providing that information to others in the future. That means they cannot share your business secrets with a competitor nor use them to train new employees when they open a competing business.

Additionally, a non-disclosure agreement will also typically prevent someone from published in private company information online, including on social media. Of course, you have to include the right terms in the agreement for it to protect your company both from the unfair sharing of trade secrets and from the digital sharing of inside information that could damage your brand. Thankfully, it is often possible to enforce non-disclosure agreements for longer than non-compete agreements.

Businesses can take former workers to court over violations

When an employee knowingly violates a non-disclosure agreement and seeks to profit off of a company’s trade secrets or tarnishes their reputation by sharing unsavory facts with others, their former employer can take them to court. Initiating a civil lawsuit to enforce a non-disclosure agreement can protect a business from substantial losses caused by unfair competition or reputation damage.

Including the right provisions in employment contracts and being willing to enforce those agreements when necessary will go a long way toward protecting a business from the liability that a new hire may create.