What Employees Should Know Before Signing a Non‑Disclosure Agreement

Non-disclosure agreements (NDAs), often called confidentiality agreements, are now standard in many employment relationships. Employers use them to protect trade secrets, client lists, and other proprietary information. But an NDA can also affect where you work later, what you can say about your job, and whether you can safely report wrongdoing.

This guide explains how NDAs work in the employment context, the key terms to read carefully, common legal limits (including for Maryland employees), and practical steps to protect yourself before signing.

1. What Is an NDA in the Employment Context?

In employment, a non-disclosure agreement is a contract where an employee or contractor promises to keep specified information confidential and use it only for authorized purposes. NDAs can be part of an offer letter, a separate onboarding document, or included in a settlement or severance agreement.

Typical employment-related NDAs may be signed:

• When you are hired as an employee or contractor
• When you are given access to highly sensitive data or trade secrets
• During a merger, acquisition, or investment process
• In connection with a settlement, severance, or separation package

NDAs are enforceable contracts if they meet general contract requirements (such as mutual assent and consideration) and comply with federal and state law. However, they cannot override your statutory rights, especially in areas like discrimination, harassment, and whistleblowing.

2. Information NDAs Can and Cannot Protect

NDAs are meant to protect confidential business information, not to silence employees about everything they experience at a workplace. Understanding what falls inside and outside the definition of “confidential” is crucial.

2.1 Commonly Protected Information

Employers typically use NDAs to safeguard information that gives them a competitive advantage, such as:

• Trade secrets (e.g., formulas, recipes, algorithms, or unique processes)
• Customer lists and key contact information
• Pricing strategies, margins, or business plans
• Non-public financial data
• Proprietary software, source code, or technical documentation
• Product development roadmaps or marketing strategies

Many states, including Maryland, recognize statutory trade secret protection and allow NDAs to work alongside those laws. An NDA cannot turn non-secret information into a trade secret, but it can create contractual obligations around broader categories of confidential material.

2.2 Information NDAs Usually Cannot Legitimately Cover

There are important limits on what an employer can require you to keep secret, especially where public policy favors disclosure.

• Public information: Facts that are already publicly available or widely known in the industry.
• Information you knew before employment: Data you already had independently, not learned through your job.
• Information you learned from lawful third-party sources: For example, insights from public conferences or publications.
• Unlawful conduct: Many state and federal laws limit employers’ ability to restrict discussion of discrimination, harassment, or other illegal practices.

Some states explicitly prohibit NDAs from barring employees from reporting or discussing claims of sexual harassment or discrimination, or from assisting in investigations by civil rights agencies. Even where there is no specific state statute, federal law generally protects your right to participate in enforcement of anti-discrimination laws.

3. Key Clauses Employees Should Read Carefully

Before signing, it helps to break an NDA into its core parts. While each agreement is different, most include some version of the following elements.

3.1 Definition of Confidential Information

This section is the heart of the NDA. Watch for definitions that are:

• Extremely broad, such as “all information relating to the company,” without clear limits.
• Not tied to secrecy, for example, attempting to protect information that is already public or commonly known in the field.
• Vague, making it hard to know what you can discuss with future employers or colleagues.

A more reasonable clause will be specific enough that you can identify the types of data that are truly confidential, often focusing on non-public, proprietary, or trade secret information.

3.2 Exclusions From Confidential Information

Exclusions are your safety valve. Common exclusions include:

• Information known to you before you signed the agreement
• Information that becomes public through no fault of your own
• Information received lawfully from another source that is not bound by confidentiality
• Information you develop independently without using the employer’s confidential data

If the NDA does not have clear exclusions, you may want to raise this point before signing, especially if you bring prior experience or know-how to the role.

3.3 Duration and Post-Employment Obligations

NDAs commonly last beyond the end of your employment. However, the duration should be reasonable.

• For general confidential information, a fixed period (for example, two to five years) is often used.
• For true trade secrets, obligations can last as long as the information remains a trade secret under applicable law.

Be wary if the agreement appears to permanently restrict you from using your own general skills, experience, or knowledge gained over your career.

3.4 Remedies and Consequences of Breach

NDAs typically outline what happens if the employer believes you violated the agreement. Possible provisions may include:

• Injunctive relief (a court order stopping further disclosure or use)
• Monetary damages, sometimes including consequential damages
• Reimbursement of the employer’s attorneys’ fees and costs if they prevail

Understanding these potential consequences helps you gauge your risk level, especially if you are moving to a competitor or starting your own business.

4. Legal Limits on NDAs Protecting Employee Rights

Even if a document is labeled an NDA, it cannot erase your legal rights. Legislatures and courts have increasingly scrutinized agreements that discourage reporting of harassment, discrimination, or other unlawful conduct.

4.1 Protection of Discrimination and Harassment Claims

State and federal civil rights laws generally safeguard your ability to:

• File a charge or complaint with agencies such as the Equal Employment Opportunity Commission (EEOC) or state civil rights commissions
• Cooperate with investigations, including providing documents or testimony
• Testify truthfully in court or in administrative proceedings

In Maryland, for example, laws have invalidated contract provisions that attempt to waive employees’ rights or remedies for future claims of sexual harassment or retaliation for reporting such claims. Courts may treat similar waivers as against public policy in other jurisdictions as well.

4.2 Limits on Pre-Dispute Confidentiality and Non-Disparagement

Recent legislation at both the federal and state levels has targeted agreements that require employees to stay silent about sexual harassment or assault before any dispute arises. While the details vary by jurisdiction, trends include:

• Restricting or voiding confidentiality clauses that apply to future, unknown claims of harassment
• Prohibiting settlement agreements from blocking employees from communicating with government agencies
• Limiting non-disparagement provisions that would prevent employees from discussing unlawful conduct

Employees should be careful with broad non-disparagement language embedded in NDAs, particularly when signing separation or severance agreements.

4.3 Interaction With Non-Compete and Related Restrictions

Sometimes NDAs are bundled with non-compete or non-solicitation clauses. In many states, including Maryland, there are growing restrictions on non-compete agreements, especially for lower-wage workers. Even if the document is titled “Confidentiality Agreement,” you should check whether it quietly includes:

• Limitations on working for competitors
• Restrictions on starting your own business in a similar field
• Bans on soliciting former clients or co-workers

These clauses may be subject to state-specific rules on duration, geographic scope, and employee income thresholds.

5. Practical Red Flags Employees Should Watch For

While each agreement is unique, certain patterns often signal that an NDA may be overly aggressive or one-sided. Consider seeking legal advice if you encounter any of the following.

• No exclusions for prior knowledge, public information, or independent development.
• Lifetime restrictions on your ability to use broad categories of information without tying them to genuine trade secrets.
• Language that appears to ban reporting discrimination, harassment, or other unlawful conduct to government agencies or law enforcement.
• Combined non-compete obligations that effectively limit where you can work, particularly if you are in a state that restricts such clauses for certain workers.
• Clauses requiring one-sided attorneys’ fees, where only the employer can recover fees if they win a dispute.
• Vague non-disparagement provisions that could be read to prohibit truthful statements about workplace conditions or illegal practices.

Not all red flags mean the agreement is unenforceable, but they are signals that you should understand the risk and, where possible, request clarification or changes.

6. Steps to Take Before You Sign an NDA

Employees often feel they must sign whatever is put in front of them, especially in competitive job markets. While you may decide to accept an NDA as a condition of employment, you still have options to protect yourself.

6.1 Read the Entire Document Slowly

It may sound obvious, but reading the full text is crucial. Avoid assuming that a “standard” NDA is harmless. As you read, make a note of:

• How the agreement defines confidential information
• Whether it includes non-compete or non-solicitation language
• The duration of your obligations
• Any mention of claims related to discrimination, harassment, or retaliation
• Whether there are clear exclusions and carve-outs

6.2 Ask Clarifying Questions

If you do not understand a clause, ask for clarification in writing. Reasonable questions include:

• “Can you specify which categories of information are intended to be confidential?”
• “Does this agreement affect my right to report discrimination or harassment to government agencies?”
• “Is any part of this agreement intended to limit my future employment with competitors?”
• “How long do these confidentiality obligations last after my employment ends?”

The response can give you insight into how the employer views the agreement and whether they are willing to adjust terms.

6.3 Consider Negotiating Problematic Terms

In some roles, especially where you have leverage or specialized skills, employers may be open to revisions. Employees sometimes negotiate:

• Narrower definitions of confidential information
• Shorter duration for non-trade-secret information
• Explicit carve-outs for whistleblowing or reporting unlawful conduct
• Mutual obligations (for example, mutual non-disparagement rather than one-sided)

While not every employer will agree to changes, asking can clarify expectations and sometimes improve the balance of the agreement.

6.4 Get Legal Advice When the Stakes Are High

If the NDA is complex, tied to a high-level position, or bundled with a severance payment or settlement, it may be worth consulting an employment attorney. A lawyer can:

• Explain how the NDA interacts with your state’s employment and trade secret laws
• Identify provisions that may be unenforceable or risky
• Suggest alternative language or negotiation strategies
• Advise on the practical likelihood of enforcement in your situation

7. Common Employee Misunderstandings About NDAs

Misinformation about NDAs is widespread. Clarifying these points can help you make more informed decisions.

• “If I sign an NDA, I can never talk about my workplace again.”
  In reality, NDAs typically cover specific categories of confidential business information. They do not usually prohibit discussing your job in general terms, your feelings about the workplace, or unlawful conduct, especially with regulators or law enforcement.
• “NDAs are always enforceable exactly as written.”
  Courts may refuse to enforce provisions that violate public policy, conflict with statutory rights, or are unreasonably broad in scope or duration. However, going to court can be costly, so it is better to understand and address issues before signing.
• “NDAs and non-competes are the same thing.”
  NDAs focus on confidentiality; non-competes restrict where you can work. They can appear in the same document, but they serve different legal purposes and are often subject to different regulatory rules.
• “Once I leave, the NDA no longer applies.”
  Most NDAs expressly extend beyond employment. You may remain bound for years, or in the case of trade secrets, as long as the information remains secret.

8. Frequently Asked Questions About NDAs for Employees

8.1 Can I refuse to sign an NDA and still get the job?

In many private-sector jobs, the NDA is presented as a non-negotiable condition of employment. An employer can generally decide not to hire someone who refuses to sign, as long as the refusal is not based on discriminatory reasons. However, if an NDA attempts to restrict your legal rights (for example, by limiting your ability to report harassment), you may want to raise those concerns or consult an attorney.

8.2 Does an NDA prevent me from reporting misconduct?

Most NDAs cannot lawfully prevent you from reporting discrimination, harassment, or other unlawful conduct to a government agency, participating in an investigation, or testifying truthfully if required. Some laws now specifically require agreements to state that employees retain these rights. If your NDA suggests otherwise, it may conflict with public policy and be unenforceable in that respect.

8.3 What if my future employer asks about my prior work?

You can typically discuss your skills, responsibilities, and general experience without disclosing confidential details. You should avoid sharing proprietary information such as specific formulas, client identities that are not public, or non-public strategies. When in doubt, keep descriptions high-level and avoid concrete numbers, names, or technical specifications that you know are confidential.

8.4 What happens if my employer claims I violated the NDA?

The employer might first send a written demand to stop the alleged disclosure and to return or delete confidential materials. If the dispute escalates, they may seek a court order to stop further use and, in some cases, monetary damages. If you receive a demand letter or are sued, it is important to obtain legal advice quickly.

8.5 Do NDAs work differently in Maryland?

Maryland employers, like those in other states, commonly use NDAs to protect trade secrets and confidential information. Maryland also has specific laws affecting employment agreements, including restrictions on certain waivers related to sexual harassment claims and limitations on some non-compete provisions. Employees working in Maryland should be especially attentive to whether an agreement attempts to waive future rights related to harassment or retaliation, as such waivers may be void.

9. Key Takeaways for Employees

Before signing an NDA, employees should:

• Understand exactly what categories of information are treated as confidential
• Confirm that the agreement does not restrict their right to report unlawful conduct
• Check for hidden non-compete or non-solicitation clauses
• Pay attention to how long obligations last after employment ends
• Seek legal advice if the agreement is unusually broad, tied to a significant payment, or could seriously affect future employment

An NDA does not have to be a source of fear or confusion. When you know what to look for and how the law limits these agreements, you can enter into them with clearer expectations and better protection of your long-term career and legal rights.