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An employee confidentiality agreement helps prevent an employee from making unauthorized disclosures of the employer's confidential information or using it for his or her own benefit. LegalNature's agreement uses a comprehensive definition of "confidential information" and "trade secrets" to ensure any and all proprietary information remains well protected.

The employee is required to exercise the utmost diligence and his or her best efforts to guard and protect against unauthorized disclosure or theft of confidential information and trade secrets. Also, if the employee learns that someone else is making unauthorized disclosures, the employee is required to notify the employer.

Agreement Length

The employee's duty of confidentiality can last as long as is needed for the parties' business purposes. Depending on the circumstances, the parties may agree on a length as short as a few months or may agree to make the duty last forever. It is best practice to limit the duration to as short as is necessary to protect the employer's legitimate business interests.

Disclaimer of Warranties

The terms of the agreement state that the employer is not making any guarantees as to the accuracy of the confidential information disclosed to the employee or as to how such information will be used. Most of the time it is a good idea to disclaim all warranties as to the confidential information and trade secrets. The main instance that you would not disclaim warranties is if the employer has made express promises to the employee that the information is correct and how it plans to use the information.

Ownership of Intellectual Property

Under the terms of the agreement, the employer will retain all work produced under the agreement. This is legally known as "works made for hire."

However, if the works or services provided are generic in nature, you may want to reword this provision so that the employee will retain ownership and the employer will only be granted a non-exclusive limited right to use any intellectual property produced by the employee.

Dispute Resolution

It is usually recommended that you include a mediation provision, arbitration provision, or both. These require disputes between the parties to be settled through mediation and/or binding arbitration, thereby avoiding the time and expense of going through the formal court system.

Next, you will indicate which state's laws will govern the agreement. Usually, the employer lists its principal place of business as the governing state. Other options would be to use the employer's state of incorporation or the state where the two parties are conducting any business together.

Additional Terms

You can add additional terms and conditions as desired. This allows you complete flexibility to tailor the document to reflect the specific situation and true intent of the parties, but be sure to preview the agreement first so that you know what has already been included.

Specific Confidential Information and Trade Secrets Protected

As mentioned above, this agreement uses a definition of "confidential information" and "trade secrets" designed to ensure maximum protection of the employer's information. Therefore, you are not required to specify the specific information that the employee is required to keep confidential. However, including this information here may help clarify the expectations of the parties and support the employer should there ever be a dispute.

Executing Your Agreement

  • Have all parties sign and date the signature lines where indicated. Electronic signatures are allowed by the terms of the agreement. The parties can also sign copies sent to each other by email, fax, or other electronic means. If you include an arbitration provision, make sure that each party signs the arbitration exhibit.
  • Make sure that all parties get a copy of the fully executed agreement.
  • That's it! You may rest assured that the disclosing party's confidential information will remain safe and secure.

Ready To Get Started? Create an Employee Confidentiality Agreement