Is a Non-Disclosure Agreement Legal?

Generally, non-disclosure agreements are legal (enforceable) under Federal and state laws. US employers have the right to protect their proprietary information and trade secrets.

Whether or not a particular non-disclosure agreement is enforceable, depends on whether or not it protects legitimate business interests. For example, if information your company deems to be a trade secret is, in fact, well known throughout your industry, then at least that part of a non-disclosure agreement is probably not enforceable.

For a trade secret to be protected by law, it must be truly confidential, have commercial value, and pose a threat to the company's well-being if you disclose or exploit it. If any part of a non-disclosure agreement is unreasonable, some courts will declare the entire document null and void. Other courts will simply "blue pencil" the non-disclosure agreement, meaning that they'll strike only what's unreasonable and enforce the rest.

The bottom line is, there is no clear-cut answer that covers each and every state. Whether or not the terms of confidentiality in a non-disclosure agreement are enforceable in whole or part, is likely up to the interpretation of a court or arbitrator. But your state's department of labor might be able to tell you if your non-disclosure agreement is generally enforceable or whom to contact to find out.

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