When you work with certain types of employees and independent contractors, they may be privy to your confidential company information. A non-disclosure agreement, or NDA, can protect that confidential information from being disclosed to unauthorized third parties. Like employee NDAs, an independent contractor NDA can be included within broad employment contracts, or in a standalone NDA.

Just like employee NDAs, enforceable independent contractor non-disclosure agreements must comply with state and federal laws. Here’s what you need to know about them, and how to create your own with SixFifty.

What is an independent contractor NDA?

An independent contractor NDA is much the same as an employee NDA. The agreement protects confidential or proprietary information from being disclosed to others for a “legitimate business purpose.” Typically, non-disclosure agreements protect confidential information such as:

  • Contracts with other companies
  • Customer or prospect lists
  • Financial information
  • Intellectual property
  • Marketing or business plans
  • Product prototypes
  • Trade secrets

The NDA defines the confidential information—but it’s also important to ensure that the agreement isn’t so broad that you incorporate non-confidential information such as information publicly known or available at the time of disclosure, or information disclosed to the other party before they signed the agreement.

Like employee NDAs, independent contractor NDAs should be limited to those actually exposed to confidential or proprietary information, and include penalties for breaching the agreement. Furthermore, there is a growing legal trend prohibiting non-disclosure agreements from including disclosures about unlawful employment practices, like retaliation, harassment and discrimination. In states with these laws that apply to independent contractors, you must ensure that your independent contractor non-disclosure agreement avoids limiting those kinds of disclosures.

Why is an independent contractor NDA important?

Independent contractor NDAs are important because they protect your company’s confidential information whenever you need to work with an outside contractor. For example, you might bring in a consultant to guide your product development. If they will be exposed to confidential information, you don’t want them to take that knowledge to your competitors. Asking them to sign an NDA is the best way to protect that information.

Should there be a breach, you may be able to immediately terminate their contract, and sue to enforce the terms of the NDA. This is usually enough of a deterrent to ensure nothing confidential is disclosed elsewhere.

What should be included?

Depending on your local and state laws, the exact contents of your NDA may differ. It’s important to carefully research the laws and draft a compliant agreement. It’s also important that your NDA comply with federal limitations. Otherwise, your agreement may not be enforceable, even if the independent contractor or subcontractors breach the agreement.

Generally, your NDA should include the names of the parties involved, including any subcontractors who may work alongside the contractor. It is their responsibility to provide those names so the subcontractors are also bound by the agreement.

Next, you’ll describe the confidential information to be protected. Your agreement must avoid being so broad it encompasses non-confidential information. Detail the parties’ confidentiality obligations, as well as any applicable exclusions.

Your independent contractor non-disclosure agreement should also define the terms of the agreement, including the time period the agreement will be enforceable. You should also include any required state or federal notice. For example, under the Defend Trade Secrets Act of 2016, you must include notice regarding immunity from liability for limited disclosures of trade secrets.

Finally, include the penalties for breaching the agreement.

Tips on creating an independent contractor non-disclosure agreement

When creating an independent contractor non-disclosure agreement, it’s crucial that it’s legally enforceable. You’ll need to research all applicable state and federal laws to ensure your agreements are compliant. While you might be tempted to use a one-size-fits-all template to save time, that can expose your confidential information to unauthorized third parties, without legal recourse. NDAs must be specifically tailored to the industry, employment situation, parties, and the information to be protected.

Having a lawyer draft your NDA from scratch ensures that it is legally enforceable, but that can also be time-consuming and expensive. SixFifty’s legal software tools offer an ideal middle ground: you can a create custom, enforceable NDA in minutes. It’s the easiest way to save time and money while protecting your intellectual property and confidential assets.

Create an independent contractor non-disclosure agreement with SixFifty

Drafting an enforceable independent contractor NDA is the best way to protect your confidential information from being disclosed to others. Instead of hiring an expensive lawyer or using a risky generic template, let SixFifty do the hard work for you.

Try SixFifty’s FREE NDA generator. We pair real legal expertise with user-friendly technology to make it easy to draft your own enforceable NDA. All you need to do is answer questions about your company and download the automatically generated document. Plus, since we monitor changes to the law nationwide, your NDA will always be up to date.

Draft a subcontractor non-disclosure agreement with SixFifty

Let SixFifty do the heavy lifting for you—and save time and billable hours while you’re at it. Ready to create your own subcontractor non-disclosure agreement? Reach out today to schedule a product demo!