Every business is a secretive source of processes or information that give it an advantage over its competitors. These could include customer lists that were developed by a great deal of effort and expense, unique pricing formulas or designs for products codes, systems, or other inventions. The law protects businesses by making these documents or processes confidential to ensure that competitors cannot easily access them.
In addition to these types of documents there are many other types of administrative documents that need to be kept secret. This could include detailed office layouts and seating plans, as well as internal procedures. Additionally, there could be confidential customer data like sales numbers or confidential data received from vendors. Additionally, there could be personal information of employees such as tax forms, pay stubs, and other payroll information.
A nondisclosure agreement is the most effective way to protect confidential company documents. However, you have to be extremely careful when writing the agreement and establishing the terms of what is considered to be confidential. Be very specific so that you don’t stop former or current employees from claiming later that they didn’t realize that the information was protected under confidentiality policies.
Be specific about the duration of the nondisclosure contract. It is not enforceable if the period of protection exceeds what is reasonable to safeguard the company’s legitimate or “protectable” interests. In general, the courts will examine the circumstances and determine what is reasonable. If you are concerned about an employee, consider offering the promise of a raise or a promotion to sign the agreement. This may be enough consideration to overcome any claims that the employee did not know the document was confidential.
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