A nondisclosure agreement (NDA) is a binding legal contract that restricts your ability to share information on a particular subject. It is most commonly used in the context of an employment or an independent contractor. Employees and freelancers who sign NDAs agree not to disclose any personal or proprietary information to anyone, while they are employed or after their employment (and often both).
Many employees and independent contractors sign a nondisclosure agreement without much thought. This is because they are so common in many industries. However, an NDA can limit your ability to work in the future. You should ask the following questions before signing an employer-provided NDA.
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1. What is the scope of the non-disclosure agreement?
A nondisclosure agreement will likely ask you to keep very specific information confidential. However, it can be so broad that it can affect your ability to work later.
Some information should not be included in an NDA. Look for a broad language that covers the following topics:
- Publicly available information or data
- Information that you received yourself or that you already had before starting work
- Information obtained by you from a third party unrelated to the employer or company requesting the NDA
If a nondisclosure agreement is too broad, it may not be legally enforceable. If it's tight, it means the company has thought about the information and is looking to enforce the contract.
You may also want to write down how long you need to keep the information confidential if you disconnect from the employer or company.
2. What are the consequences of violating an NDA?
Some nondisclosure agreements contain unpleasant consequences if you breach or fail to comply with the agreement you have made. Please note the following if your NDA includes "liquidated damages" as a result of a breach of contract. Liquidated damages are essentially a fine for disclosing information that you haven't disclosed. However, they are not intended to constitute penalties for disclosing the information. If the liquidated damages appear disproportionate to the actual damage that would have been caused by your disclosure, the clause may be void. You may want to ask an attorney about certain flat-rate indemnity clauses that you may come across in an NDA.
Violating an NDA could also mean you must stop disclosing information. This can take the form of a "court order," which is a court order that requires you to stop. Entering into a different contract based on information received about someone protected by an NDA can create a whole host of additional problems. Ask an attorney if you have any questions about a potential NDA violation.
3. What types of actions are considered a violation of an NDA?
The answer to this question depends on your particular nondisclosure agreement. Having a conversation with another person, posting information online, or even sharing how to find the information without disclosing it directly may constitute a violation or violation of your NDA. Read your nondisclosure agreement to find out what types of acts are considered a violation, and ask an attorney if you have any questions about specific acts.
With extremely restrictive NDAs, you won't even be able to name the company on your resume or portfolio. As a freelancer or independent contractor, you should consider whether the company will let you list your work on their website, on social media sites, or through other channels.
4. Can I negotiate the terms of a nondisclosure agreement?
You almost always have the option to change the nondisclosure agreement. However, NDAs of larger companies may be set in stone and can hardly be changed. If you can't agree to the written NDA, the company may move to someone else who either doesn't have a problem with the language or hasn't read it.
Ask for changes if you are not familiar with the language. If your request is denied, you may have to decide how important it is to you. Are you ready to step away from the opportunity because the company isn't changing the NDA? Companies that provide you with an NDA after you accept a position may be more likely to accept changes if you ask for it.
Ask an attorney if you have a question about a specific NDA and whether or not you should sign it. An attorney can also help you answer questions about the NDA that has already been signed so you can have peace of mind.
This article contains general legal information and not legal advice. Rocket Lawyer is not a law firm or a substitute for a lawyer or a law firm. The law is complex and changes frequently. For legal advice, please contact a lawyer.