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Protect Your Company by Keeping Your Employees in the Loop

Guest post by: Marijo McCarthy

Article Overview: Each week, I receive requests from clients who ask me to review and comment on a variety of confidentiality, non-disclosure agreements [often referred to as "NDAs"]. These have become part of the fabric of getting a deal done... and they carry serious financial consequences if they are violated.

Protect Your Company by Keeping Your Employees in the Loop

Each week, I receive requests from clients who ask me to review and comment on a variety of confidentiality, non-disclosure agreements [often referred to as "NDAs"]. These have become part of the fabric of getting a deal done… and they carry serious financial consequences if they are violated.

Consider this example: Have you ever blithely signed an NDA which requires that any employee who works on that client's project honor the same obligations to which you have just committed your company?

You know you won't violate those obligations, but what about your employees? Are they aware of the consequences? Have they ever heard the phrase "loose lips sink ships?"

As part of my standard review of client contracts, I often include a "heads-up" to let them know that in addition to a requirement that the company "preserve and protect" a client's confidential information, any employees assigned to work on that client's project will have to agree to the same provisions… often, in writing!

If NDAs are a routine part of the documentation you sign when taking on a new client, you probably already have your employees signed up to a company NDA. This should require them to protect both company confidential information and the company's clients' confidential information. If those employee NDAs are well-drafted, they probably suffice, already providing the protection a new client would expect to see in the contract it has presented to you and your company.

However, if you don't routinely have employee NDAs in place, or if the protection requested in a new client's NDA goes far beyond what your standard company document requires, take heed. You have two approaches if you want to protect your company from a costly mistake and inadvertent employee disclosure:

1. Company-wide. Ensure that each employee who may be in the position to have knowledge of confidential information owned by your company's clients in the course of providing services signs an NDA. [Be sure to check with your lawyer as to the special requirements for asking an employee to sign documents which impose obligations which may extend beyond the term of his or her employment with you.]

2. Client-specific. Ensure that relevant employees sign an NDA which mirrors the client's NDA before you assign them to work on that client's project.

The choice of company non-disclosure obligations and client-specific ones can vary between companies, so make sure to have a thorough discussion with your general counsel when this issue first arises.

Either way, and so that you never have to repeat Paul Newman's famous line, make sure you've got your NDA obligation covered!

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Article Tags: confidentiality, financial consequences, nondisclosure agreement



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