When your employees will have access to confidential company information, you can protect the information by having them sign a New York non-disclosure agreement (NDA). Typically, NDAs prohibit employees from disclosing specific confidential information they learn or have access to while they are employed. The non-disclosure provisions can be in a standalone agreement, or included as part of a broader employment contract.
If you have employees located in New York, your non-disclosure provisions for those employees must comply with New York employment law. There are a few best practices you can follow to ensure that your New York NDA will protect your company and stand up to any legal challenges.
Here’s what you need to know about New York NDAs.
Who can use a New York non-disclosure agreement?
Employee NDAs are generally legal in New York, but there are several limits and obligations employers should be aware of. The best practices below will make your non-disclosure agreement more immune from challenge in court.
What are the best practices for drafting a non-disclosure agreement in New York?
To create a strong New York NDA, follow these best practices:
- Make sure you are protecting a legitimate business interest. Enforceable NDAs need to support a legitimate business interest. Usually, that involves protecting trade secrets or other confidential or proprietary information. For instance, if an employee will not have access to confidential information, having them sign an NDA probably would not be supported by a legitimate business purpose. To ensure your NDAs are enforceable, limit them to only those employees with access to your confidential information.
- In New York, the confidentiality obligations are finite. Open-ended NDAs are generally not enforceable in New York. Your agreement should provide a specific time period the obligation lasts, such as during the course of employment or a short period thereafter. Include an exception for information that becomes non-confidential during this period.Typically, a longer duration is appropriate for information that qualifies as a trade secret.
- Define your confidential information. Your agreement should include a clear description of the confidential information to be protected. Make it clear and easy to understand by avoiding legalese. This ensures your employees will know exactly what they are prohibited from disclosing.
- Include notice required by federal law. Federal law requires you to provide notice regarding immunity from liability for limited disclosures of trade secrets. This is regulated under the Defend Trade Secrets Act of 2016. Every employee NDA or contract containing non-disclosure clauses should include this notice.
- Include important exceptions to your definition of confidential information. It’s important your definition of confidential information isn’t so broad that it covers non-confidential information. Common exceptions include information that is publicly known or available after disclosure. Similarly, information already disclosed to the employee without confidentiality obligations at the time of the agreement should be excluded.
- Exclude information related to unlawful employment practices from the definition of confidential information. There is a growing trend across the country to render unlawful NDAs that prohibit employees from disclosing unlawful employment practices, such as discrimination and harassment. Under New York law, NDAs can’t prohibit disclosure of future discrimination claims unless the employer informs the employee that the NDA doesn’t prohibit cooperation with a government agency investigating unlawful employment practices. New York also places strict limitations on the use of NDAs in discrimination, harassment, and retaliation settlement agreements.
Discover SixFifty’s New York NDA solutions
Staying on top of New York’s employment laws can be time-consuming and expensive, especially when you’re hiring employees in multiple states. However, it’s important to ensure that your NDAs and employment agreements are enforceable. If they don’t comply with New York state law, they will be vulnerable to legal challenge, which puts your company at risk.
Creating enforceable NDAs requires careful review and knowledge of the latest state and federal NDA laws. Instead of seeking outside counsel or asking your in-house legal team to draft an NDA, SixFifty can do the heavy lifting for you.
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