A Non-Disclosure Agreement (NDA) is a binding legal contract that restricts your ability to share information about a specific subject. It is most commonly used in the employment or independent contractor context. Employees and freelancers who sign NDAs are agreeing to not share private or proprietary information with others, either while they are employed or after they end their employment (and often both).
Many employees and independent contractors sign a Non-Disclosure Agreement without much thought. This is because they are so common in many industries. However, an NDA can restrict your ability to work in the future. You should ask the following questions before you sign an NDA provided by your employer.
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1. What is the scope of the Non-Disclosure Agreement?
A Non-Disclosure Agreement will likely ask you to keep very specific information confidential. However, it may be so broad that it could affect your ability to work down the road.
Some information should not be included in an NDA. Look for broad language that addresses things like:
- Publicly available information or data
- Information that you got on your own or already had before starting your job
- Data that you got from a third party that is unrelated to the employer or entity asking for the NDA
If a Non-Disclosure Agreement is too broad, then it might not be legally enforceable. If it is narrow, it indicates that the company has thought about the information and cares about enforcing the contract.
You may also want to take note of how long you need to keep the information confidential once you sever ties with the employer or company.
2. What are the consequences of breaching an NDA?
Some Non-Disclosure Agreements include unpleasant consequences if you breach, or fail to deliver on, the agreement you made. Here are some things to keep in mind if your NDA includes “liquidated damages” as a consequence for breaching the contract. Liquidated damages are basically fines for revealing information you agreed you wouldn’t disclose. They are, however, not supposed to be penalties for disclosing the information. If the liquidated damages amount seems out of proportion to the actual damages that would be suffered because of your disclosure, then it’s possible the clause may be invalid. You may want to ask an attorney about any specific liquidated damages clauses you encounter in an NDA.
Breaching an NDA may also mean that you have to stop disclosing information. This can come in the form of a “legal injunction,” which is a court order that requires you to stop. Entering another contract based on information that you got through someone protected by an NDA could create a whole host of additional problems. Ask an attorney if you have questions about a possible breach of an NDA.
3. What types of actions are considered a breach of an NDA?
The answer to that question depends on your particular Non-Disclosure Agreement. Having a conversation with someone else, publishing information online, or even sharing how to find the information while not disclosing it directly, could be a breach, or violation, of your NDA. Read your Non-Disclosure Agreement to locate the types of actions that are considered a breach and ask a lawyer if you have a questions about particular actions.
Extremely restrictive NDAs will not even let you name the company on your resume or in your portfolio. As a freelancer or independent contractor, you should consider whether the company will let you list your work on your website, social media sites, or through other channels.
4. Can I negotiate the terms of a Non-Disclosure Agreement?
You almost always have the option to modify the Non-Disclosure Agreement. That being said, NDAs from larger companies may be set in stone and nearly impossible to change. If you cannot agree to the NDA as it is written, the company might move on to someone else who either does not have a problem with the language or has not read it.
Consider asking to make changes if you are uncomfortable with the language. If your request is rejected, then you may need to decide how much it matters to you. Are you willing to walk away from the opportunity because the company won’t change the NDA? Companies that present you with an NDA after you have accepted a position may be more likely to accept modifications if you ask.
Ask an attorney if you have a question about a specific NDA, and whether or not you should sign it. An attorney can also help answer questions about the NDA you have already signed, giving you peace of mind.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.