Non-Disclosure Agreements: Everything You Need To Know

Non-disclosure agreements (NDAs) play a crucial role in the modern professional landscape, transcending high-profile industries to become commonplace across various sectors.

This article explores the essential components of non-disclosure agreements, the scenarios in which you may encounter them, and the nuances of their enforcement in 2026.

Key Takeaways

• NDAs safeguard confidential and valuable information from unauthorized disclosure.

• Employers frequently require employees to sign NDAs prior to employment, promotions, or even interviews.

• Collaborating businesses often engage in mutual NDAs to protect shared information.

What Is a Non-Disclosure Agreement?

A non-disclosure agreement (NDA) is a legally binding contract between two or more parties that establishes the confidentiality of specific protected information.

In a business context, employers typically request employees to sign an NDA to protect proprietary information or trade secrets that they wish to keep confidential.

The scope of information protected under an NDA is defined by the employer, but it commonly includes:

• Client or product details

• Marketing or sales strategies

• Proprietary processes

Essentially, if the information holds value for both the company and its competitors, it is likely to be covered by an NDA.

For an NDA to be enforceable, it must protect confidential and valuable information. NDAs generally remain effective during an employee’s tenure and extend for a specified period after termination.

Information that is already public or becomes public through work, as well as information received from third parties, is not protected under an NDA.

There are three primary types of NDAs:

1. Unilateral. Most NDAs are unilateral, meaning only one party (the employee) agrees not to disclose confidential information.
2. Mutual. Mutual NDAs require both parties to maintain confidentiality. These are common in business-to-business arrangements, such as when a manufacturer collaborates with a company’s design team.
3. Multilateral. Multilateral NDAs involve multiple parties and restrict one or more from disclosing confidential information.

When Are Non-Disclosure Agreements Signed?

NDAs are most commonly signed when starting a new job, but they can also be required at other key moments:

1. When you accept a job. NDAs are often included in larger contracts, such as an employment contract, and are typically signed at the start of employment.
2. Before an interview. Some employers may request you to sign an NDA prior to interviewing for a position, especially if the interview includes discussions about sensitive company issues.
3. When you’re promoted. If you transition to a role with access to sensitive information, your employer may require you to sign an NDA upon promotion.
4. If you’re a contract worker. Companies may ask contractors, consultants, or vendors to sign an NDA to protect confidential information they may encounter.

Key Elements of Your Non-Disclosure Agreement

Understanding the fundamental elements of NDAs is vital:

• Identifying the parties. The NDA must clearly define the parties involved: the disclosing party (the employer) and the receiving party (the employee).
• Defining what is confidential. The agreement should specify, in detail, what constitutes confidential information.
• Clarifying what isn’t confidential. NDAs typically outline circumstances under which disclosure of otherwise confidential information is permissible.
• Time frame. The NDA should specify its duration, which often extends beyond the term of employment to prevent immediate disclosure of trade secrets.
• Additional obligations. NDAs may require employees to return or destroy confidential documents after use.
• Other terms. The agreement might include clauses on modifications and dispute resolution procedures.
• Disclosure allowances. NDAs should permit the disclosing party (the employer) to allow the recipient (the employee) to share information under specific conditions.

Beyond these basics, be aware of:

• Restrictive clauses. NDAs often include non-solicitation and non-compete clauses, which are standard in employment contracts.
• Non-solicitation. This clause may prevent you from recruiting former colleagues to your new role.
• Jurisdiction. The NDA should specify where any disputes will be resolved.
• Injunction. This allows the disclosing party to seek a court order to prevent unauthorized disclosure.
• Trial forfeiture. Some NDAs may require you to waive your right to a trial in the event of a dispute.
• Non-mutuality. Certain NDAs may explicitly state that the recipient has no rights regarding confidentiality.
• Intellectual property ownership. Some agreements may claim ownership of any ideas generated during employment.

While these elements may seem stringent, they are standard practice. Never sign an agreement you are uncomfortable with; consult your employer or a labor lawyer for clarification.

Enforcement of Non-Disclosure Agreements

To enforce an NDA, a company must demonstrate that a breach occurred and that it resulted in harm.

If an NDA is deemed unenforceable, it may lead to challenges regarding other NDAs signed by employees.

Several factors can render an NDA unenforceable:

• Overly broad terms. Courts may dismiss or modify NDAs that are deemed excessively broad or burdensome.
• Lack of consideration. Valid contracts require something of value from both parties. If terminated, compensation may be warranted for signing an NDA.
• Failure to maintain confidentiality. If a company does not take reasonable measures to keep information confidential, employees may not be held accountable for disclosures.
• Public or non-valuable information. Courts are unlikely to side with employers if the disclosed information is not secret or valuable.
• Unquantifiable damages. Many NDAs include “liquidated damages” clauses, which specify a set amount for breaches and may complicate enforcement.

These challenges illustrate the complexities of enforcing NDAs. Consulting an employment attorney is essential for understanding your specific agreement.

Non-Disclosure Agreements FAQ

1. How long does an NDA last?
   An NDA lasts for the period specified by the company. Typically, NDAs range from one to ten years, but some may extend indefinitely, though the latter can be difficult to enforce.
2. Does an NDA apply to illegal activity?
   No, NDAs do not cover illegal activities. Such clauses may be unenforceable if they prevent employees from reporting legal violations.
3. Does an NDA protect an idea?
   Yes, while an NDA does not patent or trademark an idea, it does allow you to take legal action against individuals who disclose your ideas after signing the NDA.

Final Thoughts

Employers value NDAs for their role in safeguarding proprietary information. If you can effectively maintain confidentiality and adhere to the agreement’s terms, you will likely avoid complications.

In today’s competitive landscape, companies rely on NDAs to protect their business interests. Violating an NDA can lead to significant legal repercussions.

We at Zippia do not provide legal advice. As laws evolve and vary by jurisdiction, consult a local legal expert for specific inquiries regarding your NDA.

Author

Matthew Zane

Matthew Zane is the lead editor of Zippia's How To Get A Job Guides. He is a teacher, writer, and world-traveler that wants to help people at every stage of the career life cycle. He completed his masters in American Literature from Trinity College Dublin and BA in English from the University of Connecticut.