Non-Disclosure Agreements 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.
Can the Courts Limit an NDA?
Yes. A court has broad power to restrict the effect of a Non-Disclosure Agreement (NDA). For an NDA to be valid in Pennsylvania, it 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, and
- Involve an actual employee.
See Hess v. Gebhard Co. Inc., 769 A.2d 1186, 2001 Pa. Super. 65 (Pa. Super. Ct. 2001). Each case depends on its facts, however. You should have a lawyer review the NDA -- and consider the relationship between parties -- to determine whether the NDA between them is valid.
Related Restrictions
The NDA is often part of a broader agreement including other work restrictions, such as a noncompete, trade secret protection language, and/or a non-solicitation clause. All these concepts work together. For example, an non-disclosure agreement (NDA) between parties is evidence of a confidential relationship, which is an important factor for a court to use when evaluating whether to enforce a non-compete or issue an injunction to protect a "trade secret." Den-Tal-Ez, Inc. v. Siemens Capital, 389 Pa. Super. 219, 566 A.2d 1214 (Pa. Super. Ct. 1989).
Contact a Pittsburgh attorney today via email or phone about any non-disclosure agreement (NDA) related matter in Pennsylvania.
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Frequently Asked Questions
What is an NDA?
A nondisclosure agreement (NDA) is defined as follows: it's a legal contract, or part of a contract, between at least two parties. It outlines confidential material, knowledge, or information that the parties wish to share with one another for specific purposes, while restricting access to third parties.
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.
It's also a defense to the NDA if the defendant had never been an "employee" of the Defendant. For example, President Donald J. Trump had asked his administration's staffers to sign non-disclosure agreements. But an arbitrator refused to enforce then President Trump's NDAs. The reason? The signatories had been employees of the government, not Donald Trump.
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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