If your employees will have access to confidential company information, you can protect that information by having your employees sign a Michigan non-disclosure agreement (NDA). An NDA typically prohibits employees from disclosing specified confidential information the employee learns or has access to during the course of their employment. These non-disclosure obligations can be included within a broad employment contract, or in the form of a standalone NDA.
When your employees are located in Michigan, those non-disclosure provisions need to comply with Michigan employment law. Following some best practices ensures that your Michigan NDA will be enforceable and protect your company’s sensitive information.
Here’s what you should know about Michigan NDAs.
Who can use a Michigan non-disclosure agreement?
Michigan employee NDAs are generally legal—but there are certain limitations employers must be aware of. Following the best practices below will help ensure your agreement is enforceable and more likely to be immune from legal challenge.
What are the best practices for drafting a non-disclosure agreement in Michigan?
To create an enforceable Michigan NDA, follow these best practices:
- Make sure you are protecting a legitimate business interest. Enforceable non-disclosure agreements typically need to be supported by a legitimate business interest. That is most often protecting trade secrets, confidential information, or proprietary information. For example, if you ask a low-level employee with no access to private company information to sign an NDA, a court may find there is no legitimate purpose. As a best practice, limit NDAs to employees who have access to your confidential information.
- In Michigan, the confidentiality obligations are finite. NDA obligations cannot continue indefinitely. The non-disclosure provisions need to have a finite end point, such as until employment ends or a period thereafter. Don’t forget to provide an exception for information which later becomes non-confidential. Typically, a longer duration is appropriate for information that qualifies as a trade secret.
- Define your confidential information. Your agreement should include a clear, easy-to-understand description of the information to be kept private. Avoid using legalese—this ensures your employees will know exactly what they are prohibited from sharing.
- Include notice required by federal law. The agreement must provide notice regarding immunity from liability for limited disclosures of trade secrets, under the Defend Trade Secrets Act of 2016. Every employee NDA or contract with non-disclosure obligations needs to include this notice.
- Include important exceptions to your definition of confidential information. It’s important that your definition is not so broad that it would encompass non-confidential information. Include common exceptions: information which is publicly known or available at the time of disclosure, information which becomes publicly known or available after disclosure, and information already in the employee’s possession without confidentiality obligations.
- Consider excluding information related to unlawful employment practices from the definition of confidential information. There is a growing trend, at both the state and federal levels, to render unlawful NDAs which prohibit employees from disclosing unlawful employment practices, such as discrimination or harassment. Although Michigan doesn’t yet have a law like this, you can stay ahead of the curve and promote a positive, inclusive company culture by including these exceptions.
Discover SixFifty’s Michigan NDA solutions
Staying on top of Michigan’s changing employment laws is time-consuming and expensive, particularly when you hire employees in more than one state. However, it’s crucial to make sure your NDAs and employment agreements are enforceable. If they don’t comply with Michigan state employment law, they may not hold up to legal challenge. That puts your company’s sensitive information at risk.
Creating an enforceable NDA requires knowledge of the latest state and federal developments in NDA law. Rather than asking your in-house legal team to draft an NDA or seeking outside counsel, SixFifty can do the heavy lifting for you.
Drafting and maintain your employment and corporate legal documents is simple and easy with the only automated legal expertise platform built for businesses. All you need to do is answer a few questions, then download the automatically generated document.