When a valued employee leaves a company and goes to work for a competitor — or when a former employee launches a competing venture — the damage can extend far beyond losing a team member. Trade secrets, client relationships, proprietary processes, and competitive strategies can all follow an employee out the door unless the employer has taken appropriate legal steps to protect them. For businesses in New Jersey, understanding the legal tools available to protect confidential information is an essential part of workforce management.
Mandelbaum Barrett PC attorney Steven Adler authored an article for NJBiz on the use of confidentiality and non-disclosure provisions in employment contracts. Adler practices in the firm’s labor and employment law practice, advising employers and businesses on employment agreements, restrictive covenants, trade secret protection, and related matters throughout New Jersey. His NJBiz article reflects the firm’s commitment to helping New Jersey businesses understand the legal strategies available to protect their most sensitive business information.
What Confidentiality and Non-Disclosure Provisions Do
Confidentiality and non-disclosure provisions in employment agreements establish contractual obligations that restrict employees from using or disclosing an employer’s confidential information. Well-drafted provisions typically define what information is considered confidential — trade secrets, client lists, pricing strategies, financial data, technical processes, or other proprietary business information — and impose obligations that survive the end of the employment relationship. Unlike non-compete clauses, which restrict where a former employee can work, confidentiality and non-disclosure provisions focus specifically on what a former employee can do with information they acquired during employment.
Because confidentiality provisions are aimed at protecting specific information rather than restricting competition generally, they are generally viewed more favorably by courts than non-compete clauses. A well-drafted confidentiality provision can provide meaningful protection for an employer’s confidential information even in jurisdictions where non-compete enforcement is limited or uncertain.
Key Drafting Considerations for New Jersey Employers
The effectiveness of a confidentiality or non-disclosure provision depends significantly on how it is drafted. Provisions that are too broad — attempting to label virtually everything as confidential — may be difficult to enforce and can undermine the credibility of the agreement as a whole. Provisions that are too narrow may fail to protect the information the employer actually needs to protect. Effective drafting requires careful attention to the specific information the employer most needs to protect and crafting definitions and obligations that are appropriately tailored to that information.
Other drafting considerations include the duration of the confidentiality obligation, which circumstances can trigger the obligation, what remedies the employer can pursue in the event of a breach, and how the agreement interacts with any applicable trade secret protection statutes. New Jersey has adopted the New Jersey Trade Secrets Act, which provides statutory protections for qualifying trade secrets, but contractual protections and statutory protections operate differently and often work best in combination.
According to the National Labor Relations Board, certain provisions in employment agreements may implicate employees’ rights under the National Labor Relations Act, including rights to discuss wages and working conditions with coworkers. Employers should ensure that confidentiality provisions are drafted to avoid conflicts with these protected activities.
Contact Mandelbaum Barrett PC for Labor and Employment Law Guidance
If you have questions about employment agreements, confidentiality provisions, non-disclosure agreements, or other labor and employment law matters in New Jersey, the labor and employment law team at Mandelbaum Barrett PC can help.
Reach out through our contact page to speak with our team. We are here to help New Jersey employers protect their confidential information and manage their workforce relationships effectively.