Possible non-disclosure agreement issue - do I need to be concerned?

Asked over 2 years ago - Wrentham, MA

Leaving my current company, which provides professional services in the ecommerce space. I signed a non-disclosure agreement when hired that seems to prohibit sharing of confidential information. My new organization is a product company in the ecommerce space. I just want to insure that my old company has no legal authority to prevent me from joining this new organization. I think I am fine with the NDA not being a non-compete, but also my old company is looking to become a partner of my new company. They want to implement the new companies software as a systems integrator, which I think takes the whole issue of competition off the table. Thoughts?

Additional information

Here is a snippet from the NDA: During the period of my employment by the Company, I shall devote my full time and best efforts to the business of the Company, and I shall neither pursue any business opportunity outside the Company nor take any position with any competitive or similar organization other than the Company without the written approval of the Chief Executive Officer or his designee.
-and-
Notification. I agree and acknowledge that during my employment with the Company and for a period of twelve (12) months following the termination of my employment with Company for any reason, I shall inform each prospective new employer I may have, prior to accepting employment, of the existence of this Agreement, and I shall provide each prospective employer with a copy of this Agreement.

Attorney answers (2)

  1. Barbara L. Horan

    Contributor Level 9

    3

    Lawyers agree

    Answered . There are several threads to your Q, and they are somewhat tangled together.

    First, a non-disclosure agreement, as you note, prohibits sharing business confidential information (client lists, pricing policies, business strategies, etc). So the NDA would not prevent you from joining the new company: it would, however, prevent you from sharing confidential information about the old company with the new company. Because your old company wants to partner with the new company, you should be very careful, as you are in a perfect position to violate this provision of your agreement. Should your casual (or intentional) disclosure cause your old company to get less than the best deal because of what you know (and said), you could be sued.

    I am puzzled by the provision that while with the old company, you must obtain written approval of the CEO before taking a position with a competitor. This is either unusual drafting or you've left things out.

    Clearly, the agreement requires you to disclose its terms (and a copy) to your new company. If that company has in-house legal counsel, ask that person to review the agreement and advise you. If there is no in-house counsel, any good employment law attorney could help you. My office routinely reviews employment agreements and assists in employment transitions, and would be happy to assist you.

    Attorney Horan is licensed to practice in Massachusetts. The response provided here is informational only, not... more
  2. Robert M Fortgang

    Pro

    Contributor Level 13

    Answered . I agree with Atty. Horan that your NDA will not prohibit you from accepting new employment. Wikipedia provides an excellent definition of an NDA ...stating "A non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement, is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects nonpublic business information.

    Turning back to your set of facts let me state, as well, that many of my "enlightened" management clients, armed with an well-drafted NDA take the approach that if any of their employees wish to leave and go to work for a competing business entity ...good luck to you. Just leave all of the confidential, proprietary information, including the customer lists and prospect lists behind. Because we regularly represent both employers and individuals, I always get to ask my individual clients if they can be successful with the new employer without violating the terms of the NDA. As for your new employer, their concern is to not be seen to have tortiously interferred in the contractual relationship between you and your former employer. Stated another way, there are few employers who will undertake the defense of such an action for a "new hire" absent their beiief that there is (1) enough money at state to make the funding of their defense worthwhile, and (2) there exists a resonable liklihood of success on the merits. Good luck and best regards, Rob Fortgang

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