Non-Disclosure Agreement (NDA)

A contract that restricts one or both parties from sharing confidential information — common in employment, business dealings, and settlements.

A non-disclosure agreement (NDA) is a legally binding contract in which one or more parties agree not to disclose specified confidential information to third parties. In the employment context, NDAs are typically signed at the start of employment (as part of an offer letter package) or upon exit (as part of a separation agreement). They protect legitimate business interests: trade secrets, proprietary technology, client lists, financial information, and internal business strategies.

Employment NDAs have two common forms. Unilateral NDAs require only the employee to maintain confidentiality — the standard form at hire, where the company shares trade secrets and proprietary information with the employee and wants to protect it. Mutual NDAs require both parties to maintain confidentiality — more common in settlement agreements where the employer also wants to prevent the employee from discussing the terms. The scope of what is protected, the duration of the obligation, and what constitutes a breach are all defined in the agreement's specific language.

Not everything in an NDA is enforceable. Courts regularly limit or void NDA provisions that are overly broad, that attempt to prohibit employees from discussing their own wages or working conditions (which is protected under the NLRA), or that prevent reporting to government agencies like the EEOC or OSHA. Several states have enacted laws specifically limiting NDAs in sexual harassment and assault settlements — you cannot be silenced about harassment through an NDA in California, New York, or Illinois, among others. Federal law under the Speak Out Act further restricts pre-dispute NDAs in sexual harassment and assault cases.

The most consequential NDA you will sign in your career may be the one you sign in a separation agreement when you leave a job — particularly after a dispute. These NDAs are typically mutual: you agree not to disparage the company; the company agrees not to disparage you. The terms often include non-disparagement clauses, cooperation obligations, and restricted discussion of settlement amounts. Before signing any exit NDA or separation agreement, have an employment attorney review it — the consideration being offered (severance) is often negotiable, and some of the terms may be unenforceable or removable.