When you are in charge of a business, or a portion of a business, then you obviously have an incentive to optimize your company. In order to do this, you have to utilize all of the tools at your disposal to get the most out of your employees and to allow your business to grow and thrive as you intend it to.
One of the tools at your disposal is the nondisclosure agreement, which is also called a non-competition agreement. Many companies require employees to sign these agreements upon their hire. So what protections do they provide and why does it behoove a company to utilize NDAs?
An NDA benefits a company because it protects the company from a disgruntled employee (or any employee, for that matter) going to a competitor or other business and spilling trade secrets or vital information about your company. Of course, as a part of this deal, you have to offer the individual something, and this is why NDAs are often tied to employment. The company thus agrees to give the person a job if they sign the NDA.
When you utilize an NDA, you have to make sure that the contract is valid and legally compliant. This means the NDA has to protect a legitimate business interest and that the employee (or potential employee) has had the proper amount of time to fully consider the contract. Additionally, the NDA shouldn’t be “unreasonable.” In other words, the scope and time outlined in the NDA need to be fair.
Source: FindLaw, “Non-Competition Agreements: Overview,” Accessed Dec. 8, 2015