Most businesses have secrets. Whether it is how to make the “secret sauce” or lists of targeted potential customers, employers have a lot to lose if important information is lost in one form or another. A non-disclosure agreement can be an effective way to limit the dissemination of sensitive information. However, a less than carefully drafted agreement might create additional heartache for businesses. Keep the following tips in mind:

1. Use reasonableness as a guidepost. An agreement that is too restrictive may be found to be unenforceable by a court in the event of a dispute. Focus on making the limitations in your agreement reasonable – for example, it can be unreasonable to issue a blanket restriction on disclosure without defining the type of information that you are seeking to protect. Therefore, aim to be specific – and realistic.
2. Think ahead. Hopefully, your agreement will not be tested. However, if it is, be sure that you understand how disputes will be heard. This includes where – and under what law – the case will be heard.
3. Beware of non-competition bans. Many state governments (including the District of Columbia, Virginia, and Maryland) have issued bans on non-competition agreements for “low wage” employees (in Virginia, the threshold salary is about $62,000/year). Including an illegal non-competition ban with your non-disclosure agreement may compromise the agreement. Craft the agreement in a way that maximizes its enforceability.

Feel free to reach out to me to discuss your organization’s approach to maintaining sensitive information.