Non disclosure agreements (NDAs) work as legal agreements between an employer and employee designed to protect the employer if the employee gets fired or quit. These agreements restrict workers from entering the same field as their employer, or using any sensitive information or company trade secrets for profit. These agreements vary greatly from one industry to another and in Texas must pass three major tests to be legally enforceable.
To be legal in Texas, the NDA must be tied to a dual binding or reciprocal contract. This means the employer must be bound by legal obligations to the employee for the NDA to be in effect. An example would be if the employee must sign a six month NDA after termination, but the employer must give at least a two months' notice before the job termination. An NDA that doesn't require anything of the employer is not legally binding in Texas.
Directly Tied to Employer's Interest
A legal NDA includes an employer promise which directly ties to providing the employee with something of value that ties into the conflict of interest. Texas courts render most NDAs non enforceable due to this restriction. The two most common examples would be sharing classified information that could hurt the employer if leaked, or the provision of specialized training in a niche industry. The courts have ruled many times that NDA protection cannot be bought simply by offering bonus money or a pay off.
Texas law clearly states for an NDA to qualify as legal it must contain reasonable restrictions. The definition of reasonable varies between businesses as well as individual employees, but judges look at the time period of NDA restriction, the geographic area, and full range of practices restrained. The broader and more general the restrictions, the less likely they are to hold up in court. The state court system favors very specific and detailed restrictions.
Anti Raiding & Non Solicitation
Specific anti raiding provisions must be included separately in a non disclosure agreement for actual protection against raiding. This covers trying to poach the former employer's customers and contact list. Specific anti raiding provisions must meet the same state requirements as a general NDA to be legal. Both anti raiding and non solicitation provisions fall under non compete agreements which makes them subject to the same rules as a general NDA.
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