Employment contracts help limit the risk that comes with hiring new talent. Many employers like to integrate restrictive covenants into their contracts with workers to protect against future misconduct.
However, California has implemented rules limiting the use of various restrictive covenants. For example, the California civil courts typically do not enforce non-compete agreements included in employment contracts. People may be able to enforce an agreement with a prior business partner, but not necessarily with an engineer or manager who worked for the company.
The state has also adopted rules limiting non-disclosure or confidentiality agreements. Can employers still hold workers accountable for sharing non-public information about a business after leaving their job with the company?
Enforcement is still an option in many cases
While California lawmakers did adopt rules restricting non-disclosure or confidentiality agreements, those rules only apply to specific scenarios. Restrictions apply in cases where businesses use confidentiality or non-disclosure agreements to avoid bad publicity.
Workers subject to agreements as a result of settling a sexual harassment claim or similar allegation of misconduct against the business generally do not have to worry about the courts enforcing any penalty clauses included in the agreement. Companies can no longer use confidentiality agreements to hide the misconduct of leadership within the company or on the part of the organization itself.
Agreements related to trade secrets and non-public information about company practices are still theoretically enforceable. Employers that can prove workers shared private information with a new employer or on social media can potentially hold that former employee accountable for the breach of their agreement with the company.
Typically, confidentiality or non-disclosure agreements have to offer something of benefit to both parties. They have to conform to all state standards regarding contracts and restrictive covenants. Employers attempting to integrate non-disclosure agreements into an employment contract or severance agreement may need assistance. Using the right language and ensuring that agreements align with state law can help organizations protect their trade secrets and their reputations.
In many cases, confidentiality or non-disclosure agreements are enforceable in the California civil courts. Having support when litigating over a contract breach can help companies hold former employees accountable for sharing non-public information. The courts can enforce penalty clauses or issue injunctions preventing future disclosures.
