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Non-disclosure agreements are good business

On Behalf of | Jun 17, 2020 | Business Law |

Michael Bloomberg’s presidential campaign famously outspent his competitors. However, Bloomberg’s signature moment could be when Elizabeth Warren attacked him during a Democratic debate for Bloomberg’s use of non-disclosure agreements (NDAs) when the #MeToo movement was on people’s minds. Warren specifically targeted the company’s use of NDAs to silence women who experienced sexual harassment at Bloomberg.

Bloomberg the candidate would later say that his company released three women cited as examples from their obligation to keep quiet, but the damage was done. It was not long before he dropped out, vowing to put his money at the disposal of other candidates.

A misunderstood business tool

Some states have outlawed them, but NDAs have many valid uses besides covering up sexual harassment allegations. They can prevent disgruntled ex-employees from badmouthing a company, but more often, they are a tool for businesses to protect sensitive information from falling into the hands of competitors. These may involve:

  • Trademarked information
  • Trade secrets that provide a competitive edge in the marketplace
  • Product and services information
  • Business practices
  • Specialized training
  • Knowledge of a consensual sexual affair

These must be carefully crafted

Judges will generally dismiss any NDA that is overly inclusive or prevents the former employee from seeking work. The more equitable the agreement, the better the chance companies have in enforcing it. These agreements must also be consensual to be binding, with employees often receiving cash to sign.

Businesses and employees with questions often find it helpful to consult with an attorney with experience drafting or handling disputes involving an NDA. These legal professionals can help clients understand the expectations, penalties or risks involved.

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