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When to consider having employees sign a nondisclosure agreement

On Behalf of | Mar 31, 2023 | Business Law |

When hiring new employees or collaborating with freelancers, businesses may have sensitive information that they wish to control who has access to it and when.

A non-disclosure agreement can help protect this information by legally binding the employee or freelancer to keep it confidential. Here are some scenarios in which a business should consider having employees sign an NDA.

Protecting trade secrets

Trade secrets are valuable and confidential pieces of information that give businesses a competitive advantage in the marketplace. They can include anything from customer lists to marketing strategies to manufacturing processes. Companies that rely on trade secrets for their success should have employees sign an NDA to ensure that they don’t share this information with anyone outside of the company.

Collaborating on a new product or service

When collaborating with freelancers, consultants or other businesses to create a new product or service, it’s important to ensure that everyone involved understands the importance of keeping the project confidential until the company is ready to release it. An NDA can help ensure that everyone involved in the project understands the terms of confidentiality and agrees to keep the information private.

Handling sensitive customer data

Businesses that handle sensitive customer data, such as medical records or financial information, have a legal obligation to protect that data from unauthorized parties accessing it. Having employees sign an NDA can help ensure that they understand the importance of keeping this information confidential and are legally bound to do so.

Having employees sign an NDA is an effective way to protect a business’s confidential information and helps ensure that it doesn’t end up in the wrong hands. By doing so, businesses can help ensure that their confidential information remains confidential.

Founding Partners Damaso W. Saavedra and Allyson D. Goodwin