According to Forbes, 17 states have placed restrictions on NDAs to help protect employees from abuse and discrimination in the workplace, and one of those states is New Jersey. Companies commonly use non-disclosure agreements to protect sensitive information. These legally binding contracts prevent employees or partners from sharing proprietary or confidential information with outsiders.
However, not all NDAs are the same, and several factors determine their legality. It is important for employers to understand what makes an NDA legal.
Clarity and specificity
A legal NDA must clearly define confidential information. General or vague terms can make the agreement unenforceable. The agreement should specify types of information considered confidential, such as trade secrets, client lists or proprietary processes.
Reasonable duration
The NDA must have a reasonable enforceable timeframe. An indefinitely lasting agreement might be overly restrictive and, therefore, illegal. Most legal NDAs have a clear expiration date or condition.
Mutual benefit
The agreement should benefit both the employer and the employee or signatory. If the NDA serves only the company’s interests and places an undue burden on the other party, it may be unfair or unenforceable.
Lawful purpose
An NDA must serve a lawful purpose. It cannot conceal activities that are illegal, unethical or against public policy. An agreement trying to hide such activities will not be legally enforceable in New Jersey.
When drafting an NDA in New Jersey, ensuring the agreement is legal and fair is important. Companies should carefully create their NDAs to protect their interests while respecting the signatories’ rights. A well-balanced NDA can protect business interests effectively without overstepping legal boundaries.