For employers who are trying to protect their businesses, having new employees sign non-disclosure agreements is a great way to ensure that company information and trade secrets don’t get out in the event of an employee’s departure, according to Steven Sutton, a commercial litigator in New York City and the owner of the Law Offices of Steven R. Sutton.
Sutton says that employment issues are a key part of his firm’s business, and that he has acted as a commercial litigator for New York clients on both sides of this type of case. “We have had employers coming to use and asking to have non-disclosure agreements drafted as a way to tie their employees in to the company, and we have also had employees come to us to ask about what the details in the agreement they signed really mean,” Sutton says.
For business owners, having an airtight non-disclosure or non-compete agreement signed by employees can be very important in keeping company secrets confidential. These contracts are particularly important when dealing with senior-level management, and any other employees who are privy to very sensitive or confidential company information. Sutton says that companies that require employees to sign non-disclosure agreements can prohibit these employees from sharing any information that a person outside of the company would not ordinarily be aware of, and that having these provisions in place can be key from the employer’s point of view.
For companies in the health and fitness industries, in particular, having these agreements in place is the only way to protect secret client lists and keep sensitive information out of the hands of competing organizations. When a company hires a new personal trainer, Sutton explains, it would never want him or her to tell people who the company’s famous celebrity clients are. And in addition to that, the company would need to prevent that new trainer from using its client list if he or she were to create a new personal training business in the future.
Non-disclose agreements can protect much more than just client lists, though. In the case of health and fitness companies, these agreements can also prevent employees from taking their company’s techniques or training methods if they leave in the future. In fact, Sutton says that provisions in these agreements can be written to prevent employees from exposing any and all confidential trade secrets to outsiders once employment with the company has been terminated.
For the employees themselves, these agreements can take a much different turn. Rather than protecting them, many employees feel like the contracts they are being asked to sign could actually be prohibiting them from seeking employment with other companies in the future, Sutton explains.
Sutton has worked with people who said they didn’t know what they were getting into when they signed a non-disclosure agreement, and later found out that the agreement they signed essentially prevented them from earning a living in the future. “Very often, when people sign these non-compete contracts, they are not sure whether it does or does not apply to potential future positions,” Sutton says.
Unfortunately, the contracts that are signed during employment are not null once that employment is over, and certain provisions can in fact prevent people from working in the same field or industry for a period of time once their employment with the company has been terminated. Although every contract is different, Sutton says that some non-compete agreements specify that employees may not work in any industry within a certain geographic area once their employment has ended.
From the employee’s standpoint, Sutton says these types of contracts can be litigated and negotiated. In New York, hiring a commercial litigator to argue the case is a common next step after receiving notice of termination. “Our law firm has actually litigated some of these issues pretty extensively in the Supreme Court in New York, and we have had quite a bit of success in advising employees of what they can and cannot do,” Sutton says.
Among the things that a lawyer can do for a client who feels that the non-compete contract he or she signed should not be valid would be to get rid of any temporary restraining orders that prevent the client from earning a living or feeding his family. An attorney would attempt to do this by arguing that the non-compete provisions of the agreement should be interpreted in a different way, according to Sutton.
Sutton says that any employees who feel that the contracts they signed were unfair should certainly consult with a commercial litigator for help. In New York especially, these types of agreements are not always valid, depending on the facts of the case. The only way to determine whether a particular non-disclosure agreement is, in fact, valid is to have a professional attorney give it a close look.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
