When you hire an employee, having them sign a nondisclosure agreement (NDA) may be beneficial. This document states that the employee will not share information about your business or operations with anyone.
Requiring an NDA can help you keep your business’s ideas and secrets private and ensure the competition cannot steal them. NDAs are particularly beneficial in industries where “headhunters” constantly search for employees to “poach.”
Learn more about NDAs, and if having employees sign one could benefit your business here.
NDAs give you compensation options
An NDA should specify what can and cannot be shared with a competing business. If an employee violates the terms of the NDA and exposes your trade secrets, the NDA gives you cause to file a lawsuit against them. At this point, it is often possible to recover compensation for their breach of contract.
Time limits for NDAs
It is possible to have the NDA in place for an indefinite amount of time. However, there are situations when the information the individual had access to is no longer considered a trade secret. While the NDA may still be in place, the information it protects may already be public knowledge.
However, having a longer-term NDA makes sense for technology or trade secrets that may not be available to the public for years.
Taking action if someone breaches the NDA
Employees who break the NDA could be held liable for the resulting damages. Sometimes, criminal charges may be filed; however, contract breaches are typically civil matters.
If someone breaches your NDA, they will likely face a lawsuit, and the penalties you can request include the losses you incurred due to their breach. NDAs are powerful business tools to consider if you are concerned about your trade secrets.
