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What challenges surround broad NDAs?

On Behalf of | Feb 15, 2021 | Contracts

In the business world, non-disclosure agreements (NDAs) can be used for several purposes. They are often employed to protect valuable information, such as trade secrets. They can also be used to keep the terms of an employee settlement under wraps.

A third function of NDAs is to prevent employees from speaking ill of their employer. These agreements are often challenging to enforce, and may even harm the reputation of your company. Inc. explains a few of the common challenges, so you can make an informed decision about how to best protect your business.

Broad NDAs may violate federal regulations

An agreement cannot impinge on an employee’s rights under the law. For example, workers are allowed to discuss unsafe conditions at their place of work, regardless of the existence of any NDAs. This includes claims of discrimination or revealing information that benefits the public. Employees may also be entitled to discuss rates of pay thanks to protections afforded by the National Labor Relations Board.

They are also difficult to enforce

Broad NDAs are much less common than other applications. As a result, most courts lack experience with them. In some cases, the terms of specific NDAs were upheld. In others, the court deemed to the agreement to restrictive to enforceable. This is usually the case when there are concerns about public policy being breached.

How to create an enforceable NDA

Make sure your contracts does not go against any laws regarding discrimination or whistleblowers. While you can enact restrictions on employee’s discussing severance packages or settlements, you cannot prevent them from discussing their normal rate of pay.

Finally, try to make the agreement as detailed as possible. Steer clear of vague language or terms that overreach, or even border on, current laws and regulations. Having the document reviewed by an attorney experienced with contract law is also recommended.

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