Arthur R. Lehman, L.L.C.

What is a confidentiality contract in employment law?

When Manhattan business owners have both employees and trade secrets or other confidential information, those business owners may feel they have a problem. Employees may need access to the secrets in order to do their jobs, but how can an owner control the risk of the employee sharing the secret with third parties? This blog post will briefly describe one tool that a business owner might use for this purpose: confidentiality contracts.

Confidentiality contracts are also known as nondisclosure agreements or NDAs. These agreements are often a part of the general employment contract for an employee. In exchange for compensation, employees agree not to reveal confidential information to unauthorized third parties. Usually, the kinds of information protected are spelled out in the contract, as are the parties that the employee may or may not disclose information to.

What happens when an employee breaches a confidentiality contract? There are two kinds of remedies that an employer could ask for. First, an employer can request an injunction preventing the employee from sharing confidential information with unauthorized parties. If the injunction is granted, the employee would have to stop sharing or face sanctions for contempt of court. Second, an employer could sue an employee for the damages suffered from the improper sharing.

Confidentiality contracts are subject to special provisions of New York law. These contracts have to conform to the requirements of the law, otherwise a judge may find that the contract is unenforceable in whole or in part. Employers can use confidentiality contracts to stop employees from sharing information they agreed not to share, and employees can challenge the legality of a confidentiality contract or its applicability to their situation. Many employment law attorneys are able to provide employer representation and employee representation.

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