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When is a non-disclosure agreement unenforceable?

One of the hardest parts of running a business is letting employees go. When you terminate the employment contract of an employee that had access to proprietary information or trade secrets, you will probably be concerned that that ex-employee will deliver that sensitive information to your competitors, or else use it to compete with your company themselves.

It is increasingly becoming standard practice for Florida companies to make all employees sign a non-disclosure agreement upon their hiring. But some companies are overzealous in the way they draft their non-disclosure agreements, and when a dispute arises between that company and an ex-employee, the court sometimes holds that their agreement is unenforceable.

What makes a non-disclosure agreement unenforceable?

The key characteristic of an enforceable non-disclosure agreement is that it be reasonable. Florida courts will almost always enforce a non-disclosure agreement unless they decide that, under the circumstances, the agreement is too restrictive of the ex-employee’s rights.

Drafting an enforceable agreement can be a challenging balance to strike. On one hand, you have to avoid language that the court could perceive as overstepping the bounds of the employer-employee relationship with regards to limiting the employee’s speech. On the other, it has to be thorough enough to protect your company’s interests.

An experienced business law attorney can assist you in drafting an agreement that would most likely hold up in Florida courts.

If your ex-employee violates one, you have options

If one of your ex-employees had access to trade secrets, and divulged them in violation of their non-disclosure agreement, you can bring a breach of contract action against them. It’s likely that, if you win, the court will grant you an injunction, meaning that they will order the ex-employee to cease any activity related to the information. You might even be able to recover compensation for any damage done to your company by the divulging of the secret, if you can prove it.

You can also bring an action under Chapter 688 of Florida’s Uniform Trade Secrets Act. That Act gives you a cause of action if someone acquired or used your trade secret through improper means or for improper purposes.

Hopefully you will never have to face litigation related to the divulging of your trade secrets by an ex-employee. If you do, then having a solid non-disclosure agreement that a Florida court would uphold will help you to minimize the damage done to your company.

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