When signing a non-disclosure agreement, an employee agrees not to disclose any trade secrets or other confidential information of his employer both during and after his employment. While some people confuse them, a non-disclosure agreement is different from a non-compete agreement, which may limit a person’s ability to do similar work after leaving his job. Non-disclosure agreements are often legally binding in Texas.
When Is a Non-Disclosure Agreement Valid?A non-disclosure agreement can be a provision in an employment contract or a separate agreement. Here are some guidelines on when these agreements are considered valid in Texas:
- To be binding, the agreement must be based on adequate consideration, which are mutual, non-illusory promises between an employer and employee. For example, the employer’s promise of continued employment may not be sufficient consideration for a non-disclosure agreement to be valid. Some consideration, such as additional wages, must be offered by the company.
- If the non-disclosure clause prohibits the employee from using his general skill and knowledge, a court may decide that it is actually a non-compete agreement in disguise. While non-disclosure clauses are usually enforced by Texas courts, non-compete agreements must meet certain requirements, such as being limited in scope, time period, and geographical area, and no broader than necessary to protect the employer’s good will.
- A non-disclosure clause may be legal, even if the agreement contains other unenforceable non-compete or non-solicitation provisions.