In the wake of the Harvey Weinstein scandal-as well as other recent sexual harassment accusations against a wide range of public figures-non-disclosure agreements have come under scrutiny. While NDAs can be used for good-protecting company secrets, for instance-they can also have a chilling effect on an employee's willingness to report instances of harassment and abuse at the hands of senior executives.
After avoiding such allegations for years, companies are now facing closer scrutiny for allowing these practices to continue in secret under the guise of enforceable NDAs. Indeed, there is now movement to place clearer restrictions on the use of NDAs in California workplaces.
What is a nondisclosure agreement?
A nondisclosure agreement is, in essence, a confidentiality agreement where at least one party agrees to protect any confidential information that they may become privy to during their employment or relationship with the other party mentioned in the contract. The NDA will usually include a time frame in which the agreement will be binding as well as the penalty the signer will pay if they breach the agreement. Some employees will be asked to sign nondisclosure agreements to protect trade secrets, customer contacts and other private information. A confidentiality agreement can also be a mutual agreement where both parties agree to protect the information of each other.
Are nondisclosure agreements enforceable?
NDAs are generally enforceable in California in certain situations. A court is more likely to enforce an NDA that protects a trade secret, than it is to protect one that purports to protect supposedly confidential information. And NDAs that seek to enforce information that will inevitably be disclosed are generally not enforceable.
To enforce an NDA in California, the non-disclosing party must prove that the underlying NDA covers the disclosed information and that enforcing the NDA doesn't violate contract or other law. Some of the difficulties inherent in enforcing an NDA include:
- Overly broad terms: To be enforceable, the agreement must not be ambiguous and must clearly define what is involved in the confidentiality agreement including listed time frames. Additionally, the information that is to be protected must be directly linked to business or business dealings.
- The protected information is not valuable or confidential: The point of an NDA is to protect valuable information that could damage a company if shared with competitors or other parties. If the information outlined in the NDA is considered not to be valuable, it might be hard to enforce the agreement in court.
What issues can arise when harassment or criminal activity exist?
Having a nondisclosure agreement does not mean that the disclosing party can break the law and is protected from the information being disclosed. In California, confidentiality agreements made in some felony cases such as sexual assault and child sex abuse cases are not enforceable. Additionally, recent courts have ruled that NDA agreements that prevent employees from talking to prosecution in criminal cases are not legally enforceable.
If you need more information on confidentiality agreements, are thinking of breaching one or have been accused of violating one, an intellectual liability lawyer can help you determine the best course of action.