What You Should Know About Non-Disclosure Agreements in Employment

by | Jan 22, 2025 | General Issues

Non-Disclosure Agreements (NDAs) are common in employment contracts, designed to protect sensitive company information and maintain confidentiality. While these agreements serve a legitimate purpose in safeguarding trade secrets and proprietary data, they can also raise concerns for employees, particularly when NDAs are used to silence workplace misconduct or restrict lawful employee rights. Understanding the scope and enforceability of NDAs is essential for both employees and employers.

The Purpose of NDAs in Employment

NDAs are legal contracts that prohibit employees from disclosing specific information during and after their employment. Common uses include:

  • Protecting trade secrets: Such as formulas, strategies, or client lists.
  • Securing proprietary information: Including unpublished financial data or product designs.
  • Maintaining competitive advantage: By preventing employees from sharing company information with competitors.

When used appropriately, NDAs help protect the legitimate interests of a business without infringing on employees’ rights.

 

Limits on NDAs in California

California law places significant restrictions on NDAs, especially when they interfere with an employee’s ability to report illegal activity or harassment. Key limitations include:

  1. Ban on NDAs for Workplace Harassment Claims: Under California’s Silenced No More Act (SB 331), NDAs cannot be used to prevent employees from discussing claims of harassment, discrimination, or retaliation.
  2. Right to Discuss Working Conditions: Employees have the right to discuss wages, hours, and other working conditions under federal and state labor laws, even if an NDA is in place.
  3. Protection for Whistleblowers: NDAs cannot stop employees from reporting illegal activities to government agencies or participating in investigations.

These laws ensure that NDAs are not misused to suppress lawful employee actions or silence victims of workplace misconduct.

What Employees Should Watch For

Before signing an NDA, employees should:

  • Understand the Scope: Review what information the NDA covers and whether it is necessary for your role.
  • Check for Overreach: NDAs should not restrict rights protected under labor laws or limit the ability to report illegal conduct.
  • Seek Legal Advice: If you are unsure about the terms, consulting an employment attorney can provide clarity and protection.

Enforcing NDAs

While NDAs are enforceable when they are narrowly tailored and lawful, overly broad agreements may not hold up in court. For example, an NDA attempting to restrict whistleblowing or limit discussions of workplace misconduct could be deemed invalid under California law.

Protecting Your Rights

If you feel pressured to sign an NDA or believe its terms are being used unfairly, it’s important to understand your legal options. NDAs should protect sensitive information without infringing on employees’ rights to address unlawful behavior or workplace concerns.

The experienced employment lawyers at Rothschild & Alwill, APC can help you navigate NDAs and protect your workplace rights. Call our Central Valley office in Bakersfield at (661-369-8510) or our Santa Barbara office at (805-845-1190) to schedule an initial confidential consultation at no charge. Se habla Español.