Whether you’ve just started a new job or worked for the same company for a long time, if you’ve been offered a non-disclosure agreement, it’s important to understand what you’re signing. A new employment contract could significantly limit your ability to share information you learn during your employment in the future, restricting your career options.
Although you may feel like you are required to sign a non-disclosure agreement to continue working with your employer or to begin working with a new employer, that may not be the case. The business law attorneys at Jones, Gregg, Creehan & Gerace LLP are prepared to help you understand your legal rights and the implications of signing a non-disclosure agreement.
What Is a Non-Disclosure Agreement?
A non-disclosure agreement (NDA) is also known as a secrecy agreement, proprietary information agreement, or confidentiality agreement. It is a legal agreement between two parties that defines what information the parties want to protect from being shared outside of the business and outlines the restrictions on using that information.
NDAs can be useful to protect a business’s intellectual property, such as a patent for an invention. They can also protect information about business customers or clients, new processes, unpublished data, or other confidential information.
Are Non-Disclosure Agreements Legally Enforceable in Pennslyvania?
Non-disclosure agreements are legally enforceable in Pennsylvania. However, if the agreement is so restrictive that it significantly limits employees’ ability to work, a court may not uphold the agreement as a matter of public policy. Generally, non-disclosure agreements will be considered legally binding when signed. Speaking to an attorney is important if you’ve already signed a non-disclosure agreement and feel it has unfairly restricted your employment options.
The NDA may have violated your rights. If your former employer attempts to take action against you by enforcing the agreement, your attorney may be able to argue that the agreement violates public policy and that the court should strike it down. Courts will consider whether the non-disclosure agreement was included in an employment contract or an employment relationship and whether it was supported by adequate consideration.
Non-disclosure agreements can be enforceable if they include reasonably necessary restrictions to protect the business’s legitimate interest. The restrictions must be limited in geographic location and duration. In other words, if the agreement restricts an employee from working anywhere in the United States or for over five years, the court will be more likely to strike it down for being overly restrictive.
The Importance of Speaking to an Attorney Before Signing a Non-disclosure Agreement
Before you sign any type of business or employment contract, it’s important to speak to an experienced attorney. Speaking to an attorney is especially important if the contract includes limiting clauses such as a non-disclosure agreement.
These agreements could make it extremely difficult for you to work in your geographical area, significantly hindering your employment prospects. Many employees believe they can’t negotiate their employment contracts, so they feel pressure to sign them quickly. However, in many cases, an attorney can help you understand the contract terms and negotiate better terms with your employer.
The Penalties for Violating a Non-disclosure Agreement
Violating a non-disclosure agreement can lead to civil penalties, which should be included in the agreement’s terms. Business owners can pursue a civil claim against an employee or former employer for violating the agreement’s terms. They can usually pursue monetary damages or an injunction to stop further violations of the NDA.
Depending on the specific type of breach and the severity of the breach, an employee or former employee could be required to pay thousands or hundreds of thousands of dollars in damages. The individual or company pursuing the claim must prove that they’ve suffered monetary damages. The specific types of financial compensation a company or individual can pursue through a civil lawsuit for breaking a non-disclosure agreement may include the following:
- Funds for payment of legal fees and costs associated with the lawsuit
- Recovery for loss of business or business interruptions
- Punitive damages
Working with Business Owners to Draft Non-disclosure Agreements
When drafted effectively, non-disclosure agreements can help business owners protect their interests, intellectual property, property designs, information about clients, marketing designs, and other proprietary information. Jones, Gregg, Creehan & Gerace LLP regularly works with businesses in Pittsburgh and throughout Pennsylvania to draft various employment contracts, including non-disclosure agreements. A non-disclosure agreement clearly outlines the specific business information that the agreement will protect.
It will also outline the penalties a person can incur if they violate a non-disclosure agreement. The agreement aims to help protect trade secrets from being disclosed to third parties or vendors. The leaking of trade secrets can result in significant financial damages to your business, especially if your competitors discover them. When an employee signs an enforceable non-disclosure agreement and goes on to breach the agreement by sharing your trade secrets with someone else, you can pursue a breach of contract claim for remedies.
If you ask an employee to sign a non-disclosure agreement that is too restrictive, you may be unable to enforce the agreement in a Pennsylvania court. If a judge decides the contract is invalid because it violates public policy, you could find it difficult to pursue remedies.
Discuss Your Non-Disclosure Agreement with an Experienced Attorney in Pittsburgh
Whether you are an employer or a business owner, the Jones, Gregg, Creehan & Gerace LLP attorneys are prepared to help you understand your rights and legal options. We regularly help employees understand and negotiate employment contracts, including non-disclosure agreements.
We have an in-depth knowledge of Pennsylvania contract and employment laws and use them to pursue the best outcomes for our clients. Don’t hesitate to contact Jones, Gregg, Creehan & Gerace LLP to schedule an initial consultation.