NDAs are legal contracts that create a confidential relationship between parties to protect any type of confidential and proprietary information or trade secrets. These agreements are commonly used in business relationships where sensitive information is shared.
NDAs can help protect your business’s most valuable assets – its secrets. However, the enforceability of these contracts varies by state, which is why it’s crucial to understand the specific laws in your jurisdiction. In California, the law generally upholds the validity of NDAs, assuming they’re properly drafted and don’t violate any statutory limits or public policy. Because of this, courts tend to scrutinize NDAs closely, particularly when they verge on non-compete territory.
In California, Non-Disclosure Agreements are generally enforceable when they meet certain criteria:
However, NDAs will not be enforceable in California under several circumstances, including:
Understanding the nuances of enforceability can help in creating a robust NDA that withstands legal scrutiny while protecting the valuable assets of a business.
The main law governing NDAs in California is the California Uniform Trade Secrets Act (CUTSA). Under CUTSA, businesses can protect “trade secrets,” which include a wide variety of confidential business information. However, the law stipulates that the trade secret must derive independent economic value from not being generally known or readily ascertainable, and the owner must take reasonable steps to maintain its secrecy.
Non-disclosure obligations must meet certain legal requirements in California. The NDA must be in writing, it must define what constitutes as confidential information, and it must clearly state the duration and scope of the confidentiality obligation. Additionally, the NDA must be signed by all parties involved.
Recent legislation in California has placed some restrictions on confidentiality provisions in employment agreements. For instance, laws now prohibit NDAs that prevent employees from disclosing information about sexual harassment or other unlawful acts in the workplace. These changes highlight the importance of staying current with legal developments when drafting and enforcing NDAs.
It’s important to distinguish between non-competition agreements and NDAs. While both are designed to protect a company’s interests, they serve different purposes.
A non-competition agreement prevents an employee from working for a competitor or starting a competing business for a certain period after leaving a company.
On the other hand, an NDA protects confidential information that an employee might gain access to during their employment. In California, non-competition agreements are generally unenforceable, while NDAs can be enforced if they meet the necessary criteria.
Can NDAs cover oral information?
Yes, NDAs can cover oral information, but for the enforcement of such terms, the information should be documented as confidential shortly after the oral communication.
Are NDAs limited to employees and contractors?
No, NDAs can also be used with business partners, investors, consultants, and any other party with whom confidential information might be shared.
How long can an NDA last in California?
The duration of an NDA can vary, but it usually lasts as long as the information remains confidential and continues to provide competitive value to the business.
Do NDAs need to be notarized in California?
NDAs do not necessarily need to be notarized in California to be enforceable. However, notarization can help verify the identity of the signatories and prevent future disputes about authenticity.
Is it possible to terminate an NDA agreement?
Parties to an NDA can agree on terms of termination within the agreement itself, which could be tied to a specific event or time period, or they can mutually agree to terminate the NDA at any time.
What happens if an NDA is breached in California?
If an NDA is breached, the non-breaching party can take legal action to seek damages, request an injunction to prevent further disclosures, or both, depending on the severity of the breach and actual or potential damage caused.
Can I be forced to sign an NDA in California?
An NDA, like any other contract, must be entered into voluntarily. Signature under duress or coercion would affect the enforceability of the agreement.
Remember that this information is provided for general guidance and is not a substitute for professional legal advice. Always consult a lawyer to get accurate legal advice for specific situations.
At Employee Civil Rights Group, we’re here to help you navigate these issues. If you have any questions about NDAs or need assistance with drafting or enforcing one, don’t hesitate to reach out to us. We serve those in Orange, California, and the surrounding areas of Bernardino County, Los Angeles County, and Riverside County. We are here to advocate for your best interests.
