D’oh! I Broke My NDA, Now What?!

Published on:

Your employer had you sign an NDA? Here's what you should know before you attach your signature to it!

A nondisclosure agreement, or NDA, is a binding legal document that requires you, as an employee, to keep certain business-related information confidential. Your employer may have you sign an NDA to help ensure that trade secrets, marketing strategies, new technology, business processes, and other corporate information remain private and known only to select individuals.

Other types of NDAs may attempt to limit the kinds of information someone can reveal about their employment, or even regarding settlement terms. These types of NDAs are most commonly used in high-profile employment situations, such as for employees of professional athletes, Hollywood personalities and other wealthy and/or famous folk.

Violating An NDA Has Consequences

Because a nondisclosure agreement is a legal contract, it provides remedies your employer may pursue if you breach — or, in legal terms, breach — the NDA. If that sounds serious to you, it should, because the ramifications for breaking an NDA can be severe.

If your employer discovers you have leaked or misappropriated confidential information in violation of an NDA, make no mistake: Your job is likely at risk. Your employer may have built-in employment termination as one of the consequences for an NDA violation.

Even without such a provision, though, your employer is probably within their legal rights to fire you, particularly if you are an at-will employee, which means your employer can fire you for any reason, so long as it’s not an illegal one.

NDAs Are Subject To Legal Remedies

Your employer also may sue you for monetary damages they have experienced as a result of the broken NDA. Common types of lawsuits related to NDA violations include those that allege copyright or other intellectual property infringement, misappropriation of trade secrets or a breach of fiduciary duty.

Some NDAs include liquidated damages clauses, which provide that an employer can seek a preset amount of damages in case of a breach. Courts tend to view these types of provisions skeptically, though, and hold them to a high standard. Accordingly, a judge may decide not to enforce a liquidated damages clause and instead award actual damages.

Sometimes employers — especially small businesses — choose not to pursue legal remedies at all, as the cost for doing so may outweigh any potential recovery. That possibility isn’t something you should count on as an employee with an NDA, however, so your best bet is to abide by its terms and keep your peace of mind.

Carelessness Also Can Be A Violation

Finally, a note of caution: Even inadvertent or accidental breaches of an NDA can open you up to liability. That is if you mishandle confidential information without intending to divulge secrets — but the information is still leaked because of your carelessness—you also could be in violation of the NDA.

As you can see, breaking an NDA can have serious consequences, so it’s critical that you fully understand the terms of this document. You should know exactly what information is covered by the NDA and also what could happen if you breach the agreement.

As with any legal contract, pay attention to the fine print and be sure you know exactly what you’re agreeing to before you attach your signature.



Sharing is caring!