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How to ensure that a confidentiality agreement is valid and legally binding

In today's competitive business environment, companies face numerous challenges related to security, innovation and how to attract and retain top employees. In addition to ensuring employees are happy and won't be lured away by competitor companies, businesses must also contend with the possibility of both current and former employees sharing trade secrets or other proprietary information.

To protect against the sharing of this type of information, an employer may require that an employee sign a confidentiality or nondisclosure agreement. By signing this type of agreement, an employee is promising that he or she will not disclose the sort of information that is defined as being confidential as per the agreement. Confidentially agreements are legally binding and an employee who violates the terms of such an agreement may be fired and also face legal action from an employer.

When creating a confidentiality or nondisclosure agreement, businesses are advised not to be overly broad or vague in defining what type of information or scenarios constitute a breach. It's also important to include language describing the relationship between the employer and employee with regard to the validity of the agreement and also to clearly state the time frame for which an agreement is considered active and enforceable.

Additionally, while a business has the legal right to protect its interests and request that all employees sign a confidentiality agreement, the terms of an agreement cannot be too restrictive or punitive. Including unreasonable or overly restrictive terms may end up backfiring as an employee could subsequently take legal action to have an agreement deemed invalid.

Source: FindLaw.com, "A Nondisclosure Agreement," Dec. 3, 2015

Houston Chronicle, "Employee Consequences for Breach of Confidentiality," Phil M. Foweler, Dec. 3, 2015

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