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Key Facts
- Federal and state: An NDA is a contract term requiring specified information to remain confidential; enforceability depends on its wording, state contract law, and applicable federal or state limits.
- Federal level: The Speak Out Act limits judicial enforcement of predispute nondisclosure and nondisparagement clauses in sexual-assault and sexual-harassment disputes; it does not generally invalidate trade-secret protections.
- Federal level: The Defend Trade Secrets Act protects certain confidential disclosures to government officials or attorneys and requires notice of that immunity in covered employee agreements when an employer seeks specified remedies.
A nondisclosure agreement, commonly called an NDA, is a contract or clause that identifies information one or more parties agree not to disclose. NDAs appear in business negotiations, employment, vendor relationships, settlements, inventions, and transactions. The label alone does not determine what is protected or whether a court will enforce every term.
What an NDA usually defines
An NDA commonly identifies the parties, defines confidential information, states permitted uses, lists exclusions, describes required safeguards, and sets a duration. It may also address return or destruction of materials, compelled legal disclosure, remedies, governing law, and where disputes will be heard.
A unilateral NDA imposes confidentiality duties mainly on one recipient. A mutual NDA imposes duties on both sides when each expects to share protected information. A related non-disclosure agreement template may illustrate clause structure, but an example cannot establish the law governing a particular agreement.
Confidential information and trade secrets are not identical
Parties can contract to protect information that does not satisfy every element of a statutory trade secret. Federal trade-secret law generally requires information that derives economic value from not being generally known and is subject to reasonable measures to keep it secret. An NDA can be one of those measures, but calling information confidential does not automatically make it a trade secret.
Common exclusions cover information already known without a duty of confidentiality, information that becomes public without breach, information received lawfully from another source, and information independently developed. The precise exclusions and proof rules come from the agreement and governing law.
Enforceability has contract and public-policy limits
State contract law ordinarily supplies rules about formation, interpretation, remedies, and public policy. Courts may examine whether a clause identifies protected information with enough clarity, reaches information the recipient already possessed or could lawfully obtain, lasts for a defensible period, and conflicts with a statute or protected right.
An NDA cannot safely be read as a universal ban on communicating with regulators or law enforcement. EEOC guidance states that an agreement may not restrict an individual from filing a discrimination charge, and statutory labor rights can limit employment confidentiality provisions that interfere with protected concerted activity. State laws may provide additional protections.
The Speak Out Act is narrow
The federal Speak Out Act applies to claims filed on or after its enactment date. In a sexual-assault or sexual-harassment dispute involving alleged violations of federal, tribal, or state law, a nondisclosure or nondisparagement clause agreed to before the dispute arose is not judicially enforceable.
The Act preserves more protective state or local law and expressly says it does not prohibit protection of trade secrets or proprietary information. It therefore does not erase NDAs across employment or make every post-dispute settlement confidentiality term unenforceable.
DTSA whistleblower immunity and notice
Under 18 U.S.C. § 1833, an individual is immune from federal and state trade-secret liability for disclosing a trade secret in confidence to a government official or attorney solely to report or investigate a suspected legal violation, or for a sealed court filing. The statute also addresses disclosure to an attorney in a retaliation lawsuit and use of the information under court seal.
Employers must provide notice of that immunity in agreements governing trade secrets or confidential information with employees, including specified contractors and consultants. An employer that omits the notice cannot obtain exemplary damages or attorney fees under the DTSA in an action against that individual based on conduct after the agreement was made.
How NDA terms fit together
The definition of confidential information should be read with the permitted-use clause, exclusions, disclosure procedures, duration, and remedies. A broad definition may be narrowed by exclusions, while a short definition may interact with separate invention-assignment, data-security, or trade-secret provisions.
Nondisclosure and nondisparagement are different. Nondisclosure restricts revealing defined information or conduct; nondisparagement restricts negative statements. A contract may contain either or both, and statutes can treat them differently.
