The actions of employees while working at a company and after leaving the organization can have a direct impact on an organization’s success. Someone’s failings could lead to a product recall or a sexual harassment lawsuit against the company. An employee could also go on to start a competing business and damage a company’s market share.
The special terms and clauses that businesses include in their employment contracts can protect them from many of the risks of doing business. For example, many employers require that new hires or those who are moving into more important positions at a company sign a contract with a non-disclosure clause or confidentiality agreement included.
Such terms legally prevent a worker from sharing private information about the company or their employment with outside parties both during and after their employment with the company. How can non-disclosure agreements benefit the companies that add them to their employment classes?
1. They protect intellectual property rights
When an employee cannot share or reproduce the details about a company’s operations that they learn on the job, the organization will have less reason to worry about its trade secrets and other intellectual property.
Non-disclosure agreements allow an organization to take legal action if necessary against someone who publishes or shares private information while subject to a non-disclosure agreement.
2. They protect a company’s reputation
Even when an organization doesn’t have a secret recipe or client list to protect, there may be another reason to request confidentiality from employees. A non-disclosure agreement or confidentiality clause can prevent someone from talking about the details of business operations in a public forum, including on the internet, which can be important for a company’s reputation.
Angry former employees could easily exaggerate a situation or highlight details that make an organization look bad to the public. Confidentiality agreements can help protect organizations against online defamation on the part of a former employee.
When companies are careful to include thoughtful terms in their employment contracts, they can reduce the likelihood of unfair competition and other issues, like a video talking poorly about their company going viral. Updating and improving employment contracts with the assistance of an experienced legal professional can help a company to better protect itself from the liability that its staff members represent.