ABCs of Employment Law: Confidentiality Disclosure Agreement

Keeping certain company information protected can be extremely important for the health of a business. If your business depends on keeping information confidential or protecting knowledge of trade secrets, our attorneys at Walcheske & Luzi can ensure that enforceable confidentiality agreements are in place to provide adequate protections. This month, our attorneys explained what a Confidentiality Disclosure Agreement (CDA) is, including the exceptions and limitations they can have.

What is a Confidentiality Disclosure Agreement?

A Confidentiality Disclosure Agreement is a legally binding contract between two or more parties that outlines the terms and conditions under which certain confidential information will be shared and handled. These agreements are used by employers to protect sensitive company information, trade secrets, intellectual property, and other proprietary data from being disclosed to unauthorized individuals or competitors. The key components of a CDA are as follows:

  1. Parties involved: The agreement clearly identifies the parties involved, namely the disclosing part (often the employer) and the receiving party (employee or third party).
  2. Definition of Confidential Information: The CDA specifies what constitutes confidential information. This can range from financial data, business strategies, customer lists, software codes, and other proprietary information.
  3. Purpose of Disclosure: The agreement outlines the purpose for which the confidential information is being shared, including discussions related to a business collaboration, product development, or employee onboarding.
  4. Duration of Confidentiality: The duration for which the information must remain confidential is defined. After this period, the receiving party may no longer be bound by the confidentiality obligations.
  5. Obligations and Responsibilities: The CDA delineates the responsibilities of both parties, including how the receiving party should handle the confidential information, restrictions on sharing or using the information, and measures to prevent unauthorized access.

Exceptions and Limitations of a CDA

CDAs often include exceptions and limitations. These exceptions help define how and when confidential information can be shared. Some common CDA exceptions include:

  1. Authorized Disclosure: CDAs commonly allow for disclosure of confidential information to certain authorized individuals, such as employees or contractors directly involved in a project. This guarantees that those who need access to the information can work effectively.
  2. Court Orders and Legal Requirements: If a court issues an order or if there is a legal requirement, the receiving party may be obligated to disclose the confidential information.
  3. Previously Known Information: Information that was already known to the receiving party before entering the CDA may not be subject to confidentiality obligations. CDAs typically specify that only new, undisclosed information is covered.
  4. Permitted Purpose: CDAs often outline the specific purpose for which the information is being shared. If the receiving party uses the information for a purpose not authorized in the agreement, they may be in violation of the CDA.
  5. Publicly Available Information: Information that becomes publicly available through no fault of the receiving party may not be subject to confidentiality restrictions.

In the complex landscape of employment law, CDAs play a vital role in protecting sensitive information and preserving a competitive advantage for businesses. By understanding the key components and the exceptions and limitations of CDAs, both employers and employees can reach an understanding of how best to safeguard and share sensitive company information.

Walcheske & Luzi is here to help navigate the complexities of the employment law world, and support your business as landscape continues to change. If you are seeking assistance with CDAs or any other employment legal matter, contact us today.