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Why Your NDA Might Not Be Enforceable in Virginia
Many employers entrust their employees with sensitive, valuable, or proprietary information. This information is often necessary to enable the employee to do their job, but it could damage the company if it falls into the wrong hands. To reduce that risk, many employers require their employees to sign non-disclosure agreements (NDAs), which are employment contracts that impose penalties for unlawful disclosure of the information they cover. Virginia courts generally enforce NDAs according to their terms, so long as they comply with several common law requirements. You can avoid inadvertently drafting an unenforceable NDA by seeking the counsel of a Richmond employment contract attorney.
The NDA Is Vague
To be enforceable, NDAs must be precise in their language. That typically requires the drafter to clearly identify the parties involved, a definition of the confidential information the employee will be entrusted with, the scope of the confidential (including any allowable exceptions), the obligations of the employee with respect to the information, the term of the agreement, and the remedies for breaches (e.g., termination). Courts may resolve ambiguities in an NDA in favor of the party against whom it is being asserted.
The NDA Is Unreasonable in Duration
The term of an NDA must be reasonable in duration. While there is no bright-line rule for what constitutes a “reasonable” duration, the term should be no longer than is necessary to protect the usefulness of the information. Many NDAs range in duration from one to five years, although some may be considerably longer, depending on the information involved.
The NDA Covers too Much Information
NDAs can cover a wide range of information. However, the party disclosing the information (i.e., the employer) must have a legitimate interest in keeping the information secret. The agreement cannot prevent the disclosure of all information about the employer. NDAs are commonly used to protect the following types of information:
- Product specs and plans
- Marketing plans
- Customer lists
- Know-how and negative know-how
- Data and algorithms
- Recipes
- Financial information
The NDA Is Not Supported by Consideration
NDAs must be supported by consideration. Generally, consideration means that there was a bargained exchange between the parties — i.e., something was bargained for between the parties wherein the promisee received something from the promisor. In the case of NDAs, the consideration typically is that the employer receives a promise that its information will be kept secret, and the employee receives a job.
The NDA Contains Unlawful Provisions
Under Virginia Code § 40.1-28.01, no employer may require an employee or prospective employee to sign an NDA (or any other type of agreement) that has the effect of concealing the details related to a claim of sexual assault or sexual harassment as a condition of employment.
Make Sure Your NDA Is Enforceable by Working With a Richmond Employment Contract Attorney
The best way to ensure that your NDA is valid and enforceable and that it covers the information you need is to draft it in collaboration with an experienced attorney. For more information, please contact a Richmond employment contract attorney at Pierce / Jewett by calling 804-502-2320 or using our online contact form.