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Employee and Severance NDA

Create an employee or severance NDA that protects trade secrets while preserving the right to report harassment or discrimination. Attorney review available.

Introduction

An employee NDA is a confidentiality agreement between a company and a worker that limits what the worker can share about the employer's trade secrets and confidential business information. A severance NDA is the version signed when someone leaves, usually inside a separation or release agreement, and it often keeps the terms of the exit private. What separates both from a commercial NDA between two businesses is who signs it: an employee NDA cannot stop a worker from reporting or discussing unlawful conduct. The federal Speak Out Act of 2022 makes a pre-dispute NDA or non-disparagement clause unenforceable to the extent it covers sexual assault or sexual harassment, and a worker's right to report to agencies like the EEOC, the NLRB, and the SEC cannot be waived. Many states add their own limits on top. DocDraft drafts an employee or severance NDA from your facts, with those protected-disclosure carve-outs built in, and attorney review is available before anyone signs.

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Key Things to Know

  1. 1

    An employee NDA protects trade secrets and confidential business information. It can cover client lists, pricing, formulas, processes, and financial data the employer has a real interest in keeping private.

  2. 2

    It cannot silence unlawful conduct. Federal and state law prevent an employee NDA from stopping a worker from reporting or discussing harassment, discrimination, or other illegal workplace acts.

  3. 3

    The federal Speak Out Act applies everywhere. A pre-dispute NDA or non-disparagement clause is unenforceable to the extent it covers a dispute involving sexual assault or sexual harassment.

  4. 4

    Government reporting rights cannot be waived. An employee keeps the right to file a charge or talk with agencies like the EEOC, the NLRB, and the SEC, no matter what the agreement says.

  5. 5

    A severance NDA usually travels with a release of claims. When someone leaves, the confidentiality terms are often part of a broader separation agreement, and older workers get extra time to review it.

  6. 6

    Trade-secret agreements need a whistleblower immunity notice. Federal law reduces the remedies an employer can recover if the NDA leaves out the immunity notice required under the Defend Trade Secrets Act.

  7. 7

    State law can add requirements. Many states restrict what an employee NDA may cover and require specific carve-out language, so the enforceable version depends on where the employee works.

Key Decisions

Defining Confidential Information

Protected Disclosures and Legal Limits

Signing and Enforcement

Customize your Employee and Severance NDA Template with DocDraft

EMPLOYEE NON-DISCLOSURE AGREEMENT

This Employee Non-Disclosure Agreement ("Agreement") is entered into as of [DATE] by and between [COMPANY NAME] ("Company") and [EMPLOYEE NAME] ("Employee").

  1. PURPOSE In the course of Employee's employment, Employee will have access to confidential and proprietary information of the Company. Employee agrees to protect that information on the terms below.

  2. CONFIDENTIAL INFORMATION "Confidential Information" means non-public information the Company treats as confidential, including trade secrets, business and financial data, customer and pricing lists, methods, processes, software, and other proprietary information disclosed to or learned by Employee. Confidential Information does not include information that is or becomes public through no fault of Employee, that Employee lawfully knew before employment, or that is independently developed without use of the Company's information.

  3. OBLIGATIONS Employee agrees to use Confidential Information solely for the benefit of the Company, to not disclose it to any third party without authorization, and to return or destroy all Confidential Information on request or at the end of employment.

  4. PROTECTED DISCLOSURES (WHAT THIS AGREEMENT DOES NOT RESTRICT) Nothing in this Agreement limits or prevents Employee from: (a) reporting, filing a charge with, or communicating or cooperating with any federal, state, or local government agency, including the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission, or the Occupational Safety and Health Administration; (b) discussing or disclosing conduct Employee reasonably believes to be unlawful, including harassment, discrimination, or retaliation; or (c) exercising any right that cannot lawfully be waived. Consistent with the federal Speak Out Act, this Agreement does not restrict Employee from speaking about a dispute involving sexual assault or sexual harassment.

  5. DEFEND TRADE SECRETS ACT NOTICE Under the Defend Trade Secrets Act (18 U.S.C. Section 1833(b)), an individual is immune from criminal or civil liability for disclosing a trade secret (i) in confidence to a government official or attorney solely to report or investigate a suspected violation of law, or (ii) in a complaint or other document filed under seal in a lawsuit or other proceeding.

  6. NO OTHER RESTRICTIONS ON RIGHTS This Agreement does not waive Employee's right to file a charge, testify, or participate in an investigation, and does not require Employee to notify the Company before doing so.

  7. TERM AND ENFORCEMENT Employee's obligations continue during and after employment for as long as the information remains confidential. The Company may seek injunctive relief and any other remedy available at law for a breach.

  8. GENERAL This Agreement is governed by the law of the state where Employee primarily works. If any provision is unenforceable, the remaining provisions stay in effect. This Agreement is the entire understanding between the parties on this subject.

[COMPANY NAME] By: [SIGNATURE] Name/Title: [NAME AND TITLE] Date: [DATE]

EMPLOYEE [SIGNATURE] Name: [EMPLOYEE NAME] Date: [DATE]

Frequently Asked Questions

An employee NDA, or employee non-disclosure agreement, is a contract in which a worker agrees to keep the employer's confidential information private. It typically covers trade secrets, client and pricing data, internal processes, and other proprietary business information. It does not, and legally cannot, prevent the employee from reporting unlawful conduct or cooperating with a government agency.

An employee NDA is usually signed at the start of employment to protect the company's confidential information during and after the job. A severance NDA is signed when the employee leaves, often as part of a separation and release agreement, and it commonly also keeps the terms of the departure confidential in exchange for severance pay. Both are confidentiality agreements, but the severance version is tied to an exit and a payment.

No. Under the federal Speak Out Act of 2022, a pre-dispute NDA or non-disparagement clause is unenforceable to the extent it covers a dispute involving sexual assault or sexual harassment. Many states go further and void confidentiality clauses that conceal any workplace harassment or discrimination. An enforceable employee NDA carves those reporting rights out rather than trying to restrict them.

An employee NDA is enforceable when it protects legitimate confidential business information and stays within the limits the law sets. It becomes unenforceable, in whole or in part, when it tries to silence unlawful conduct, waive government-reporting rights, or reach information that is not actually confidential. Because state rules differ, the enforceable scope depends on where the employee works.

Severance is usually offered in exchange for signing a separation agreement that includes confidentiality and a release of claims, so declining can mean forgoing the payment. You are not required to sign, and you can negotiate the terms. An employee who is 40 or older is entitled by federal law to at least 21 days to consider the agreement and 7 days to revoke it after signing. Reviewing it with an attorney before you sign is an option DocDraft makes available.

Silenced No More is the common name for a wave of state laws that limit how far an employee or severance NDA can go. They generally void confidentiality and non-disparagement clauses that would conceal workplace harassment, discrimination, or other unlawful conduct, and several require the agreement to state plainly that the employee may still report and discuss those acts. The details vary by state, from which conduct is covered to whether specific carve-out language is mandatory.

The Defend Trade Secrets Act gives employees immunity for disclosing a trade secret in confidence to the government or in a court filing to report a suspected violation of law. The law requires employers to include a notice of that immunity in any agreement that governs trade secrets or confidential information. If the notice is left out, the employer cannot recover certain enhanced damages and attorney fees from that employee, so the notice is standard in a well-drafted NDA.

It can, but those clauses are governed by their own, often stricter, state rules and are increasingly limited or banned. A confidentiality obligation is generally easier to enforce than a non-compete. If you want to restrict competition or solicitation as well, that belongs in carefully drafted separate provisions, and whether they are enforceable depends heavily on your state.