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Should You Make Employees Use an NDA?

Burgoyne Law Offices Oct. 5, 2021

A nondisclosure agreement (NDA) is a legal contract that you can use to protect sensitive information. You can have your employees sign it before allowing them to have access to your business secrets and other proprietary information.

The goal, of course, is that you want to make sure that those employees simply will never share the information that you don’t want to get out, even if they go to work for your competition. But the NDA can also help you in a legal sense if they violate that contract and it harms your company. They are now liable for the damage they have done because they expressly stated that they would not breach that contract.

Furthermore, the NDA makes it explicitly clear what information you consider sensitive. There is no longer the chance of a mistake with an employee or another business owner accidentally revealing something.

What Are the Downsides?

One of the main downsides is just the fact that the NDA makes it appear that you don’t trust the other party. This idea of a lack of trust can damage the relationship. That’s not as bad as losing your sensitive information, of course, but it can be detrimental.

Additionally, some employees or business partners may be unwilling to use an NDA, not wanting to limit what they can do in the future. If they refuse, you then have to decide to withdraw the requirement or let the relationship end. You could lose a valuable business deal.

What Should You Do?

What you choose to do is ultimately up to you. Just make sure that you know exactly what legal steps to take if you do want to use an NDA or what other options you have if you do not.