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Use of NDAs with employees

| Oct 21, 2020 | Employment Law |

Companies have the right and need to protect confidential business information so that it does not get into the wrong hands, allowing it to be used against them by a competitor, for example. At the same time, employees have the right and need to report unethical or illegal activities if or when they arise in a workplace.

Balancing these two things can be tricky but is possible, even when using nondisclosure agreements.

NDAs commonly used with employees

According to the Harvard Business Review, as many as one in every three people today are asked to sign a nondisclosure agreement by an employer. Some terms of these agreements aim to guard information like sales data, marketing strategies and new product development concepts, all of which seem quite logical and acceptable.

Non-disparaging provisions

Forbes explains that other terms of nondisclosure agreements may not be viewed as acceptable in the same way. One prime example is what people commonly refer to as non-disparaging provisions. These clauses aim to ban a person from speaking negatively about a company or disclosing details of their experiences while working there. Significant financial penalties may be imposed on people who break these provisions.

Concerns about hush clauses

The Society for Human Resources Management indicates that non-disparaging provisions often raise concerns about potentially limiting an employee’s ability to report illegal or unethical behaviors or activities. The SHRM recommends employers review the terms of contracts used with employees to ensure an appropriate scope, one that is not overly broad in nature. This may offer a means of creating an NDA that appropriately protects the business without unnecessarily impeding whistleblowers.