Nondisclosure agreements: Trends to watch

Nondisclosure agreements (NDAs)—also referred to as confidentiality contracts, noncompete agreements, and restrictive covenants—can protect confidential information that, if used inappropriately, would harm your business or bottom line. Recent changes in law and trends may affect your use of nondisclosure agreements. NDAs should be used strategically and reviewed every year to ensure that your form complies with the law and puts your best foot forward to optimize business strategy.

One-way NDAs and mutual NDAs

Employer-employee NDAs are one-way NDAs. With one-way NDAs, you seek to control the employee’s use of shared confidential information and therefore prevent possible harm based on an employee’s use of such information during or after employment.

Mutual NDAs are more commonly used between businesses when confidential information is being shared by both parties, and therefore both parties will request the other make assurances on how it will or won’t use such information.

The common denominator in both types of NDAs is that one or both parties are restricting the use of confidential information to protect one or both parties from hardship or loss based on the release of such confidential information. NDAs include legal consequences if the confidential information is used in a way that harms the employer.

Trend changes in NDA use