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. 

What Happens If You Breach a Non-Disclosure Agreement?

If a person enters into a valid non-disclosure agreement, he could face civil penalties if he later violates it. This issue usually comes up after an employee has left his job for employment with a competitor, or takes a job with a competitor after he’s been terminated. He could be liable for damages under a breach of contract legal theory. The agreement may have a provision that sets the amount of damages owed for violation of this clause. Do you have questions about signing an employment contract that contains a non-disclosure agreement? Is your employer claiming you violated this agreement? Walt Taylor is an experienced employment law attorney in the Dallas, Fort Worth, and Mid-Cities area. He is here to review your contract and advise you on the legality of your non-disclosure clause and other provisions in your contract so that your legal rights are protected. Contact us online or call 817.380.4888 to schedule your free consultation today.

What Happens If There Is no Non-Disclosure Agreement?

You need to know that, even in the absence of a non-compete, an employee may still be obligated to protect trade secrets of his employer, even after resignation or termination.  Laws such as the Federal Defend Trade Secrets Act and the Texas Uniform Trade Secrets Act are still in effect.  You should consult with an experienced attorney before running the risk of violating these statutes, or any duties that may arise under common law.
Walter L. Taylor
Employment & Medical Peer Review Lawyer helping workers, doctors, nurses, dentists and pharmacists in Texas.