A nondisclosure agreement
, sometimes known as a confidentiality agreement
, is a type of contract that requires an employee to protect trade secrets
and other various confidential information provided to an employee throughout his or her employment. This type of business agreement
restricts disclosure during employment and also for a period of time after the employment relationship ends. A business’ confidential information is valuable and vital and needs to be protected to ensure the business will remain competitive in the present and after key employees no longer work there. This is why employers often protect proprietary information from being misappropriated by a former employee.
Nondisclosure agreement can also be used outside of an employment setting, and during business transactions. The person to whom the information is disclosed is legally bound to keep the information secret.
However, not all information will be granted protection. Information will be regarded worthy of protection if it is genuinely proprietary and confidential, such that its disclosure would give a new employer an unfair advantage over the original employer. The employee’s mere skill or experience does not satisfy this requirement. Customer lists that are created by a business through extensive time and effort and are kept in confidence may be treated as trade secrets and thus, are a protectable interest.