Non-disclosure agreements have appeared in news reports on political scandals and sexual misconduct. NDA agreements are also being used with more frequency in employment contracts and may pose problems for employees. A NDA, or confidentiality agreement, is a legally-binding contract that prohibits the signer from disclosing sensitive information. Substantial financial penalties, as high as $25,000 to $750,000, may be imposed for each breach of these contracts.
Some employers try to have new or prospective employees enter non-competition agreements before hiring. However, they may also have existing employees enter a non-compete clause in new employment contracts. Employers offer these agreements to avoid disputes over employment terms and to protect themselves after a worker leaves or is terminated. Businesses may rely on non-competition clauses to assure that a worker does not disclose confidential information after they leave that employer or use this knowledge while working on their own or for a competitor.
A noncompetition agreement can prevent a person from seeking more lucrative and satisfying employment. However, these consequential clauses may have been contained on one form or box that was checked without meaningful review when employment contracts were signed. A federal bill may help some workers but has serious drawbacks.
Employees may use their free time to seek profit from their interests or hobbies by writing a book, developing a new video game or making pottery or jewelry. Social media and the internet almost limitlessly expand the opportunity to market these side hustles and performing other outside work such as blog writing. Employees need to carefully review existing employment contracts and negotiate updated agreements to deal with these activities.
For almost 20 years, forced arbitration agreements have been buried in legal verbiage in employment agreements requiring employees to submit to binding arbitration for disputes and taking away their rights to go to court. Despite many court cases upholding arbitration agreements, there are still many ways to contest these clauses in employment contracts.