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Understanding noncompete and nondisclosure agreements

On Behalf of | Jul 10, 2020 | Business & Commercial Litigation |

Every company must look for ways to prevent external sharing of its sensitive information without approval. Guarding data is one means of safeguarding a competitive position and future growth potential. 

Employers naturally must share confidential information with some employees to ensure they can do their jobs. Some companies use nondisclosure agreements and noncompete agreements as a means of doing this without exposing the company to unfair risks. 

An overview of nondisclosure agreements 

As the name implies, a nondisclosure agreement aims to keep certain information secret. Also called a confidentiality agreement, the use of this form of contract has become routine in the modern workplace. However, Harvard Business Review explains that such use has not been without some controversy. 

Some allege that a poorly crafted NDA may ban an employee from speaking out about a wrongdoing, essentially becoming a way to silence people and protect the wrong behaviors. NDAs should clearly identify what information falls within the scope of the agreement. 

An overview of noncompete agreements 

A noncompete agreement shares some characteristics and uses with a nondisclosure agreement. According to Forbes, a noncompete may also place restrictions on the external sharing of select information. In addition, a noncompete agreement may place restrictions on where employees may work after they leave a company. The restriction may focus on geographical location or industry. 

Some people have accused noncompete agreements of sabotaging employees’ future career opportunities, making it important that companies create their contracts carefully. The state of Georgia has outlined specific provisions that offer guidance for employers on the enforceability of these contracts.