Nondisclosure Agreements Explained

Attorney Kevin Costello

Restrictive covenants are promises that employers ask of employees that confine you, not during the course of your employment usually, but after your employment ends.  The way they most commonly come up, for example, is if you're going to do a sales job and you have access to important information, or at least information the employer thinks is important, about its customer base, its product or how it does business.

In order to protect it from their competition when your employment ends, either on your own or with another competitive employer, they may ask you to sign a restrictive covenant prohibiting you from disclosing that information to anyone else, or even more oppressively, from working in the same field.

Restrictive covenants can sometimes be very overreaching.  They don't take into account geographical range, they don't take into account how long they impose a hardship on the worker and their ability to support a family, and generally the law supports them only in narrow circumstances.  But the threat of a covenant and what an employer can do to you when you leave is often a bargaining chip in the manner and way that you depart from your employment.

We often find that the threat of enforcing a restrictive covenant is really not made in good faith by an employer, but rather it's used as a bargaining tool to take advantage of you when your employment ends.  How your employment ends is very relevant to whether or not a restrictive covenant is enforced.  If you're leaving on your own expressly for the purpose of competitiveness, the court may enforce the covenant to some degree.  But if you're leaving because something wrong was done or because your employer was dishonest or discriminatory or retaliatory, the odds that the court is going to enforce a covenant against your interest are fairly long.

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