Non-Disclosure Agreements and Confidentiality Clauses in PA
We're often asked: are non-disclosure agreements binding? The short answer is yes, so long as the NDA is "reasonably necessary" to protect the employer's interests. This means, it cannot be over broad or unduly burdensome to the employee. Plus, an NDA must meet the formal requirements of a contract in PA, described below.
Frequently Asked Questions
Will the Courts Limit NDAs?
Yes. The law takes a close look at non-disclosure agreements. These must:
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- Be needed to protect the employer's interests.
- Not be too broad, or unduly burdensome to the employee.
- Involve Information that's private and not available publicly already.
- Involve something that's not illegal or against public policy.
- Involve an actual employee.
Former President Donald J. Trump had asked his administration's staffers to sign non-disclosure agreements. There, an arbitrator refused to enforce then President Trump's NDAs. The reason? The signatories were employees of the government, not Donald Trump.
What Defenses Exist to NDAs?
Apart from being needed to protect an employer's interests, an NDA is an understanding that must pass muster as a valid contract. Thus, it needs "consideration," i.e, the parties must exchange something of value to each other. As such, the employer must give the employee something of value (usually money) for the NDA promise.
So Why Would my Employer Ask Me to Sign an NDA?
Many employers are legit. They just want to keep private information away from the public. For example, a home-owner/employer would be well advised to have his cleaning person or nanny sign an NDA to keep his dirty laundry.
Could an Employer Have a Hidden Agenda for the NDA?
Yes. Many NDAs are sneaky attempts to limit an employee's options to compete or help a competitor, short of stating the employer's reasoning.
When Must Information subject to a Valid NDA be Disclosed?
There are numerous examples:
- Responding to a subpoena, and
- When applying to work in law enforcement. There, the applicant must disclose the NDA and how it will impact the amount of information provided by the applicant. See Title 44, §7307 For more, click here.
What's The Difference Between a Confidentiality Clause (in a Settlement Agreement For Example) and an NDA?
Any time a party pays to settle a civil dispute, he may demand that the terms of the settlement be kept confidential. Courts are also likely to enforce these, without the level of scrutiny given to NDAs. But why? It's because of the relatively equal bargaining power of parties to a settlement agreement. Our Pittsburgh litigation attorneys routinely enter into such agreements for our clients when settling a case.
- Personal Injury Settlements. These include motor vehicle accident case involving full tort or limited tort.
- Credit Card Debt Cases. Here, the parties often want to keep the settlement away from the public's view.
- Builder or Developer disputes. Here again, the party paying to settle is also paying for privacy.
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