Arthur R. Lehman, L.L.C.

Basics of a confidentiality agreement

As mentioned previously on the New York City Business and Commercial Law Blog, there are various methods companies utilize in order to protect the investment they make in their employees and in their products. When it comes to employees, the method discussed previously was the non-compete covenant, whereby employees are prohibited from engaging in certain types of employment for a specific period after their employment comes to an end. As mentioned previously, these provisions must be reasonable and the courts have various gauges for this. Another way employers can protect their confidential information is through an employee confidentiality agreement.

An employee confidentiality agreement is not to be confused with a non-disclosure agreement-the latter is a way to protect secret information and is entered into with other firms, whereas a confidentiality agreement is with employees. Generally, a confidentiality agreement contains language that prohibits employees and contractors from sharing non-public information about the company with others, except as required by their position within the company.

To protect their information as a trade secret, an employer must be able to prove that the information is both non-public and proprietary. In other words, that the information is known only to a small select group and not to the world at large and it must be communicated to the employee that the information is confidential.

There are various steps that an employer can take to ensure that the confidentiality contract they create is enforceable, one of them being focusing on the personnel manual and making sure the company has a policy regarding this. An experienced lawyer can help employers create enforceable contracts and help them protect their valuable information.

Source: Ifitsmallbusiness.com, "Employee confidentiality agreement-how it works," David Waring, May 27, 2015

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