Feb 2026 Newsletter – Confidentiality Agreements Should Be a Condition of Employment

Confidentiality Agreements Should Be
A Condition Of Employment

To get an edge in today’s competitive marketplace, businesses look to exploit every opportunity that presents itself. Without protections in place, this means that competitors may take advantage of your company’s confidential and proprietary information, such as customer lists, prospective customer lists, employee lists, pricing, general business know-how, future plans and even trade secrets that your former employees had access to. Even more insidious is the case of an employee pilfering, exploiting and selling your company’s sensitive information, including customer leads, for their own personal gain while still currently employed and being paid by you.

As an employer, your business should be proactive and protect sensitive information by requiring a confidentiality agreement as a precondition of employment prior to providing access to such information. By having the prospective employee or independent contractor sign a confidentiality agreement prior to employment, the candidate knows of his/her obligations concerning your company’s confidential information from the outset. If the candidate refuses to sign, then you know the candidate may not be the right person for the position and sensitive information has not been compromised.

State law does provide some protection, but reliance on state law and litigation for a common law tort is misplaced. Absent an express agreement for injunctive relief and damages, including a forfeiture of any deferred compensation package, costs of investigation, and attorneys’ fees, state law in and of itself may not provide adequate remedies for damage that has been done. More significantly, reliance on state law puts you, the employer, in a “reactive” or “responsive” posture to try and do damage control. Instead, employers are better advised to allow state law to supplement a confidentiality agreement tailored to your business or, if necessary, the specific position or employee and provide the necessary remedies to compensate your business for the damages and costs of investigation.

The confidentiality agreement can be easily placed into an employment or independent contractor agreement, or signed as a separate contract. Providing access to confidential information is sufficient consideration from the employer’s standpoint to make the agreement binding and the employee’s confidentiality obligations enforceable in court. Care should be taken in defining your confidential information and to ensure that all of your business’ sensitive, confidential and proprietary information falls within the scope of the confidentiality agreement’s protections. Additionally, in the event of breach, the employers need to be able to avail themselves of immediate injunctive relief without the legal formalities of proving damages or posting a cash bond, which should be agreed to and provided for within the confidentiality agreement.

In summary, be proactive in protecting your business’ proprietary and confidential information rather than reactive and require a confidentiality agreement as a precondition of employment.

Do not hesitate to email or call or visit us if you have any questions or inquiries concerning this subject matter.