Many business owners require their employees to sign non-disclosure agreements (NDAs) when they are hired. NDAs create a confidential relationship between employees and an employer. Employees cannot share sensitive and confidential information they have access to while working for the company. NDAs prevent business ideas from falling into the hand of competitors, and a breach of this agreement by an employee can have dire consequences.
What happens when an employee breaches an NDA?
Leaking private or sensitive company information is a serious matter that must be addressed quickly. When an employee breaches an NDA, business owners must investigate further to assess the best approach to resolve the issue.
Review the initial NDA agreement
NDAs are not a verbal agreement. They are clearly written agreements outlining the privacy terms of the NDA, ensuring the employee is aware of the confidential nature of their work. An NDA agreement bounds the employee to secrecy, regardless of whether they are actively employed at the company. Some NDAs also include the consequences of a breach.
Gather evidence of the breach
Taking action against an NDA breach is difficult without sufficient proof. While investigating the breach, it is essential to gather every piece of concrete evidence that proves that the employee has violated their agreement of confidentiality.
Legal remedies for violating an NDA
Violation of contract suit
When two parties enter into a signed legal agreement, they retain the right to hold each other accountable for their outlined responsibilities. An NDA is a contract between an employer and an employee, and a breach of this contract is a legal violation.
Breach of fiduciary duty
Senior-level employees maintain a certain fiduciary responsibility to their company. A breach of an NDA is a serious offense and can give the employer the right to pursue damages.
IP litigation
Depending on the nature of the information illegally shared outside the company, an NDA breach can escalate into IP litigation. IP litigation can cover:
- Patent infringement
- Trademark infringement and copyright
- Licensing disputes
NDAs ensure confidentiality between an employer and employee. Upholding this agreement is essential for businesses to shield sensitive material from competitors and other third parties. Violating this agreement is a serious matter that can quickly escalate into severe consequences for both sides.
