Employment confidentiality agreement laws allow an employer and an employee to form contracts regarding private, confidential, or sensitive material that will be part of the work arrangement. In most cases, it is the employer who is requiring the employee to sign a confidentiality agreement. For instance, the employer may be asking the employee not to disclose company trade secrets, or not to discuss information regarding company stock.

Confidentiality agreements can often form part of the employment contract that is signed upon hiring. In other instances, the employer may present the employee with a confidentiality agreement as the need arises for later projects.

How Are Confidentiality Agreements Enforced?

Enforcing a confidentiality agreement is essentially the same as enforcing any other contract. Both parties will be legally bound to the terms of the agreement once they sign it. Violations of breaches of a confidentiality agreement can result in legal penalties, such as a monetary damages award if the breach causes financial losses.

In addition, the agreement may include a clause indicating how it is to be enforced. For instance, the confidentiality agreement may include a no-litigation clause, meaning that the parties will seek mediation or other alternative dispute resolution measures instead of a lawsuit.

Confidentiality agreement laws vary by jurisdiction. For instance, California employment confidentiality agreement laws have highly specific requirements for contracts covering trade secrets.

What If I am Asked to Not Report a Violation?

Confidentiality agreements do have their limits, however. An employer can never ask an employee to keep company violations confidential. In fact, the employee may face legal consequences if they fail to report company violations or illegal activity to authorities. Thus, a confidentiality agreement that asks an employee not to report violations is invalid.

State and federal whistleblower laws dictate that an employer cannot fire an employee who files a valid complaint or violation with legal authorities. That is, an employer cannot fire an employee out of retaliation for uncovering a violation. However, employees are also prohibited from filing false or frivolous claims against employers.

Do I Need a Lawyer for Help with an Employment Confidentiality Agreement?

Confidentiality agreements are important and can help protect a business against unauthorized disclosures of information. You may wish to hire an employment lawyer if you need help drafting, reviewing, or negotiating a confidentiality agreement. Your attorney can provide you with legal advice on the agreement, and can also represent you in court if you face a legal dispute.