Ok…So you may or may not have grown up during the 1980s like me. When thinking about this article, I had a flashback to Bobby Brown’s “My Prerogative.” Just in case you now have it stuck in your head, you can click the link and listen to it while you read this post.
We’ve had some issues over the years with people talking when they shouldn’t. Several years ago, a former client took some of our proprietary information and started selling it on the internet. A couple of years later, I had a former employee do the same thing. Well…they attempted to do it anyway. They were shut down.
Is a non-disclosure agreement (NDA) important for your business? For a lot of businesses this is a very important document not only to protect the business and trade secrets but to protect the customers. Many businesses have these in place and is part of the initial employment packet for new employees. It then becomes a part of their permanent hiring packet. We have both employees and customers sign them when confidential information is being shared.
Per Wikipedia, “A non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement (SA), is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects nonpublic business information.”
The purpose behind having this type of document in place is to prevent the loss of information in the production of products or delivery of services. This is especially true for those businesses wanting to protect their trade secrets. Any business that offers a service to clients or customers needs to have in place. Protection of client/customer sensitive information is at the top of the list of must have for these types of businesses. There should be a clear understanding of what signing the agreement means with all new employees and continued yearly training so that it is not something that just slips up with employees.
NDAs are not only for in-house freelancers, people that you may outsource work to and anyone that is in contact with any of the information that you may have around the such as delivery services, maid services etc… Anyone that works with you whether it is an employee or business should not have an issue with signing this agreement. The agreement must be signed to be binding.
The agreement can be written to your specific business needs. Know that if any changes are made to this document everyone will need to sign the new agreement. Training is also a part of having this document in place. The reasoning behind this is that not everyone may understand all the facets that the agreement covers.
An example of a breach of the NDA, two employees are having lunch at a restaurant. During the meal, they discuss issues that occurred at work involving a client. There are others that overhear this information. This is a breach of the agreement and can be very detrimental to the business. This is one simple example of when problems can arise if training isn’t in place. Most employees feel that it is ok to talk when you are away from work about work or customers. For some businesses, this can be more of a problem than they know.
A non-disclosure agreement protects businesses, customers, clients, and employers. It is an integral part of most to protect trade secrets. This type of document can be simple and to the point. It must be signed to be binding. Any changes to the agreement requires having a new one signed by the parties involved in the business. One of our business coaches can help you with this agreement.