Confidentiality or Non-Disclosure Agreement is a form of contract wherein an employee commits to keep all trade secrets privately. An employer must offer form of compensation in exchange for the promise not to disclose vital company information.

Confidentiality agreement aims to protect company trade secrets against competitors or public disclosure. It seeks to maintain its sales/product/service edge through non disclosure of quality content/process/ technique.

An employer uses confidentiality agreement to protect a new product idea that will be crafted by an employee. This employee's output will be used as a "proto-type" or a means for business profit. To preserve such business strategy, a pledge not to disclose product secret to unwarranted parties is needed.

If the employee reveals trade secrets to a competitor, the employer may ask the court to stop and prevent further disclosures. The court may award monetary damages.

Here are some FAQs on Confidentiality agreement:

Q: When can an employer use confidentiality agreement?

A: 1. In situations when the employee's task involves creating a prototype that will be presented to a potential business partner or client.

2. In situations when the employee's task involves keeping the company's financial records and presenting it to potential investor.

3. In situations when the employee has prior involvement in creating a new product that will be presented to the market.

4. In situations when the employee is involved in preparing a business proposal to a contractor or service provider.

5. In situations when the employee has access to vital business trade secrets

Q: What are the types of confidentiality/ nondisclosure agreements?

A: Confidentiality agreements come in several types to fit the nature of employer-employee relationship. These are:

1. Unilateral Confidentiality agreement- It is used for situations where only one party will be revealing private information for review to another.

2. Mutual confidentiality agreement- It is used for situations where both parties will be exchanging sensitive data.

3. Multilateral confidentiality agreement- It is used for situations where several parties will be exchanging confidential information.

Q: What are the elements in confidentiality/ nondisclosure agreement?

A: A confidentiality agreement must contain the following elements:

1. The kinds of information to be kept private

2. The warranted parties to receive confidential information

3. The primary purpose of the sensitive information

4. The marketability duration of the protected information

5. The security measures that parties must exercise to prevent unwarranted disclosure

6. Compensation in exchange for agreeing not to disclose confidential information to unwarranted parties

Consult with a Corporate Business/ Employment lawyer in Los Angeles to learn more on how to draft/ contest a confidentiality agreement.