When Do You Need a Confidentiality Agreement?
You may have a general idea of why it’s a good idea to have a confidentiality agreement. And you may even know what to put in your confidentiality agreement, to make it enforceable and to ensure that it says what you need it to say. But have you given any thought to when you actually need a confidentiality agreement?
Why Not Have Everybody Sign?
Yes, you could just have everybody sign one—employees, vendors, contractors, investors—anybody that has any information at all about your business. But that runs into practical problems. Are you going to enforce the confidentiality agreement against absolutely everyone?
Because if you don’t, you run the risk of a court one day hearing about that, and seeing that you don’t consistently enforce your confidentiality agreements, so maybe the information you wanted to protect isn’t so secret after all.
Outsiders and Confidential Information
One time you do want a confidentiality agreement is when anybody outside the company is getting access to any secret information.
This may be investors you make a pitch to, other businesses you propose a joint venture with, or outside companies that may provide a service to you—imagine a tech company you are hiring to create that great app for your business. Do you know they won’t take your idea and sell it–or whatever they build for you–to a competitor?
These third parties have no alliance to you; they may not be able to be fired, and there’s nothing preventing them from taking your information and selling it or using it against you.
New Directions for the Business
Sometimes you have a great business idea, and you get it implemented immediately. But other times, it may take some time to get that business idea going—you may need time to build, strategize, implement, or to do other things to get that business idea going.
During that time, your ideas could easily be stolen, by outsiders or by your own employees. When employees start working on new projects or new ventures for the business, it may be time for a confidentiality agreement.
Higher or Lower Level Employees?
There is no one rule that says that a higher level, better paid employee is more or less likely to steal your trade secrets, than a lower level, lesser paid employee may be.
That said, higher level employees do tend to have more skill and more training, and may also be more likely to be seeking “greener pastures” with competitors. They also may have access to more sensitive corporate information, just by virtue of their positions.
As such you may want to consider any and all higher level employees, sign a confidentiality agreement.
Consideration for Confidentiality
Remember that if someone is already an employee, and you want them to sign a confidentiality agreement, you’ll need new consideration—that is, they’ll have to get something in return for agreeing to confidentiality.
That problem doesn’t exist with new hires, where signing the confidentiality agreement is consideration for being hired in the first place.
Need a confidentiality agreement–or one enforced? Let the West Palm Beach commercial litigation lawyers at Pike & Lustig help you.
Source:
legal.thomsonreuters.com/en/insights/articles/confidentiality-agreements
