A confidentiality agreement or a nondisclosure agreement is a contract requiring an employee to protect trade secrets and other confidential information provided to an employee through his employment. This type of business agreement restricts disclosure both during employment and for a time after the employment relationships ends. A business’ confidential information is important and must be protected in order to ensure the business will remain competitive even after key employees no longer work there. This is why employers often protect proprietary information from being misappropriated by a former employee.
Nondisclosure agreements are also used outside of the employment setting, and during business transactions. The person to whom the information is disclosed is legally bound to keep the information secret.
Not all information, however, is granted protection. Information will be deemed worthy of protection if it is genuinely proprietary and confidential, such that its disclosure would give a new employer an unfair advantage over the original employer. The employee’s mere skill or experience does not satisfy this requirement. Customer lists that are developed by a business through substantial effort and that are kept in confidence may be treated as trade secrets and therefore, are a protectable interest.
If an employee or other person bound by a nondisclosure agreement reveals confidential information in violation of the NDA, the injured party can potentially sue for breach of contract and pursue injunctive and monetary relief.
Illinois courts have, however, held that a nondisclosure agreement that includes provisions that are overly broad are unenforceable – these business agreements generally end up in business litigation. A nondisclosure agreement that would make it impossible for an employee to ever hold a job in the same field is clearly undue hardship and unenforceable. An employer needs to be cognizant of the language of the nondisclosure agreement in order to protect his or her confidential and proprietary information and for courts to enforce the nondisclosure agreement.