Guide to Avoiding Disaster in NDAs and Non-competes

Many jobs these days require people to sign non-disclosure (NDAs) and non-compete agreements (Non-competes).  These agreements are designed to protect companies and their proprietary secrets. But all too often poor planning gives these agreements the exact opposite effect.

Generally to be valid these agreements must be narrowly tailored: NDAs intended to protect something of specific value.  But when companies go too far, these agreements are often invalidated by courts.  Virginia, for example will not blue-pencil or alter the agreement to make it enforceable.  Either it is good and valid or it is not.

It is also tough if not impossible to use these agreements to keep confidential information that is in the public domain, has been learned before employment, or learned after the end of employment. 

NDAs are also cannot be used to cover up criminal behavior.

Some NDAs are written so broadly as to become non-competes.  Those agreements also tend not to stand up well.

When it comes to non-competes, there are similar limitations.  They can’t be used to create a monopoly by boxing everyone out of the field. They must generally be limited in duration, scope and geography.  Some professions, such as medicine, are simply not amenable to these agreements for public policy reasons. 

But employees or businesses should still be careful about both of these types of agreements.  A very common mistake occurs when employees are being terminated.  They are often required to agree to a non-compete or an NDA to get their severance. 

The choice between foregoing money and signing an agreement that may limit your future career opportunities may not be clear. It is, therefore, important to check through the terms and make sure whatever proposed agreement will not prohibit you from earning a living. 

Some people think that they can dodge being bound by just taking the severance and not signing the agreement.  But that is not always the case.  Some agreements may be accepted without signing a thing through partial performance; essentially, you take the money, a court may determine that you agreed.

There may also be language in the employee handbook binding you to some non-compete or non-disclosure term which may have seemed innocuous at the time because it was signed at the beginning of the employment. 

When in doubt, don’t needlessly risk your future earning potential. Call an attorney.