I get asked this question all the time: what the heck is a NDA and do I need one for my business. My answer 99% of the time: YUP!
However, I like to break down the nitty-gritty of NDAs to my clients. Here’s some helpful information for you to determine if a NDA is something you need.
What is a Non-Disclosure Agreement?
A Non-Disclosure Agreement (“NDA”) is a legal contract where one or more parties agree not to disclose confidential information that they have shared with each other while doing business together and/or after they stop doing business together. A NDA is usually a stand-alone document. However, confidentiality clauses can simply be included in an employment agreement, an independent contract agreement, or any other type of contract that establishes a business relationship.
What do you find in a NDA?
Here’s what you usually find in a NDA:
- What information is deemed “confidential”
- What information is available and excluded from confidentiality
- The receiving party’s obligations
- Time period that information must be kept confidential
When is a NDA needed?
Most people usually ask when a Non-Disclosure Agreement is needed. Honestly, whenever you have an employee that knows things about your business or your personal life is a great time to have a NDA. Every time an employee/independent contractor leaves, they are undoubtedly taking information with them. NDAs protect YOU from worrying that they will leak that information to either 1) start their own copy-cat business with everything they learned from you; 2) steal your clients; or 3) disclose personal information about you.
Keep your info safe!
As entrepreneurs, we are more likely to disclose personal, business, medial, and financial information to our hired help than in big businesses. Thus, its super important to keep this information safe!
Whether you use a form template or draft one yourself, a NDA is a great way to protect sensitive business information from being disclosed to the public. If you regularly give out financial/business/personal information to your employees, you should ask them to sign a NDA. Just be sure to always tell them to read them first so that they understand their obligations!