Confidentiality agreements are common features of employer-employee relationships. Of course, confidentiality is more important for some companies than others. The more your company relies on intellectual property, including trade secrets, the more carefully you need to think about how to draft employee confidentiality agreements.
Draft a Standalone Confidentiality Agreement, not an Inserted Confidentiality Clause
If confidentiality is critical enough to your business, consider having your employee sign a standalone confidentiality agreement. One of the reasons for drafting a standalone confidentiality agreement is to impress upon the employee the importance of confidentiality to the company.
The other reason is to make sure you don’t miss anything important that cannot be included in a brief confidentiality clause. Below are some items you don’t want to miss:
A definition of “confidential information”
Permitted uses (in response to a court order, for example)
Specific disclosure restrictions
Duration of restrictions (remember that trade secret can potentially last forever)
Choice of law
Keep in mind that the foregoing list is far from exhaustive.
Define “Confidential Information” Carefully
List every type of information that could be considered confidential (in broad terms, if appropriate) and every possible media that could contain such information – including the employee’s memory. You don’t want to be caught years later arguing before a judge what is confidential and what is not.
Explicitly assert company ownership of all confidential information acquired by the employee during the course of the employment relationship. A blanket statement isn’t enough – be specific, especially with information that is protected only by trade secret law. The only thing that belongs to your employee are his compensation and benefits.
Use a California Choice of Law Clause
The agreement should state that California law applies to any dispute, at least with respect to employees that live and work in California. This is especially true if you are doing business in California as a foreign corporation, or if your company has out-of-state branches to which the employee might be temporarily transferred during the duration of the agreement. The dispute will likely be heard in California, and California judges are most knowledgeable about California law.
Carefully Consider Whether to Include Non-compete and Non-solicitation Clauses
California courts almost never enforce non-compete agreements, because they view them as a restraint of trade. Non-solicitation clauses don’t fare much better unless your client list is so exclusively that it could legitimately be protected as a trade secret. Think very carefully before you insert either of these two clauses into a nondisclosure agreement.
A Small Mistake in Wording Could Come Back to Haunt You Years Later
Drafting agreements is part art, part science. It requires an in-depth understanding of the legal background of the subject matter, of course. It also requires an ability to write so unambiguously that a lawyer representing a future opposing party cannot take what you say and twist it around to make it appear that it means something else. None of this comes naturally.
At CKB Vienna LLP, however, our employment lawyers enjoy the benefit of decades of combined experience drafting agreements. Our clients hail from from all over Ontario, Claremont, Riverside, Fontana, Upland, Rancho Cucamonga, including Alta Loma and Etiwanda and beyond. Call us at 909-980-1040 or fill out our online contact form so that we can discuss ways in which we can best assist you.