Every business has information or processes that give it an advantage over competitors. These could include customer lists that were created by a great deal of effort and expense, unique pricing formulas or designs for products, codes or systems, or any other inventions. The law protects business by making these documents and processes confidential so that competitors cannot easily access them.
In addition to these kinds of documents in addition, there are a lot of administrative items that need to be kept private. This could include seating plans, office layouts and internal procedures. There could also be confidential information on customers, such as sales numbers and confidential information from vendors. Additionally, there could be personal information on employees, such as tax forms, pay stubs, and other payroll data.
A nondisclosure agreement is the most effective way of protecting confidential company documents. Be very cautious in defining what information is confidential and in drafting your agreement. Be specific to ensure that you can stop employees who are currently employed or former employees from claiming later that they did not know that the information was protected by confidentiality policies.
Be very clear about the duration of the nondisclosure agreement. It is not enforceable in the event that the period of protection is more than is necessary to protect the company’s legitimate or « protectable » interests. In general, the courts will consider the circumstances to determine what is reasonable. If you are concerned about a particular employee, you might consider offering the promise of a raise or a promotion to sign the agreement. This may be enough consideration to fend off any accusations that you did not know the document was confidential.