Non-disclosure agreements — commonly referred to as “NDAs” — are crucial to safeguard sensitive business data. However, if these documents are not properly constructed or drafted to be enforceable, your proprietary information, client lists, marketing initiatives, and confidential asset information could be compromised. Here are several strategies you can implement to help keep your business secrets from walking out the door:
1. Draft a Strong and Enforceable NDA
Drafting a strong NDA that will stand in court can help ensure your confidential business information is adequately protected. A New York court will typically enforce an NDA if it meets the following criteria:
- The agreement is reasonable in scope — The NDA must not be overly broad or place unreasonable restrictions on a party.
- The NDA protects a legitimate business interest — The agreement must protect a company’s trade secrets or other proprietary information and not simply attempt to unfairly restrict the company’s competition.
- The NDA does not violate public policy — The NDA must not attempt to prevent an employee from whistleblowing, reporting illegal activity, or disclosing unethical conduct.
In addition, the NDA should clearly define what constitutes confidential business information. Ambiguous terms can lead to the NDA being rendered unenforceable for vagueness.
2. Present Your NDA at the Commencement of Employment
It is best to present an NDA at the beginning of the employment relationship, before the employee has access to the company’s proprietary information. This can help ensure confidential data is protected from the outset and all parties understand their obligations. Presenting an NDA early can also prevent disputes concerning what information is considered confidential and set the expectation for how such data should be handled. In cases where sensitive information must be shared with job candidates, an individual might be asked to sign a NDA during the interview process.
3. Implement Strong Digital Security Measures
With so much proprietary information being stored online, in hard drives, or on clouds, cybersecurity is crucial. It’s essential to implement strong digital security measures to prevent unauthorized access, data breaches, and other cybersecurity issues. Consider the following strategies to protect against internal and external threats that could lead to a leak of your confidential business data:
- Encryption
- Restricting access controls
- Using multi-factor authentication (2FA)
- Conducting regular cybersecurity audits
- Keeping software up to date
- Identifying security weaknesses and vulnerabilities
By creating a culture in the workplace that is conscious of security, employees can better understand the importance of protecting the company’s sensitive information from threats.
4. Provide Regular Training
Providing regular training to employees regarding confidentiality and their obligations under the NDA is vital. The training should cover the scope of the NDA, the employee’s responsibilities in maintaining confidentiality, and the measures an employee should take if they discover a breach or misuse. Not only should training be required to onboard, but the company’s policies should be reinforced with regular interactive training sessions — and an exit interview should be conducted with each employee to ensure all confidential information is returned.
5. Respond Promptly to Any Breaches
Upon discovering any breach of a non-disclosure agreement, it’s imperative to respond promptly. Gather the evidence necessary to confirm a breach has occurred and review the NDA to determine which terms were violated. Inform all relevant departments and issue a formal notification to the breaching party demanding they cease the unauthorized disclosure of confidential data.
A knowledgeable business attorney can evaluate your case and advise you regarding the specific steps you should take. Depending on the facts of the case, you may be entitled to pursue a claim against the breaching party for theft of trade secrets, breach of fiduciary duty, or breach of contract. Potential remedies can include injunctive relief, monetary damages, and compensation for financial losses.
Contact an Experienced New York Business Attorney
If you are a business owner seeking to draft or enforce a non-disclosure agreement, an experienced business attorney can help. At Barnes & Barnes, P.C., we offer high quality legal services and trusted representation for a wide range of commercial matters, including those involving NDAs and other business contracts. Contact us at (516) 673-0674 to schedule a consultation.
