Nondisclosure agreements, often referred to as NDAs, have become>Why organizations use NDAs
Organizations from a wide range of industries, from entertainment to technology, use NDAs for a wide range of purposes, from protecting proprietary information to quieting potentially disgruntled former employees. At their core, NDAs are a tool to control what information leaves an organization.
"Typically, a company is asking an employee or a potential employee to sign an NDA because there will be conversations that are confidential," explains Eric Harkins president and founder of GKG Search & Consulting. "It's usually because there is a strategy or new opportunity for that organization that they do not want anyone (specifically, their competitors) to know about."
And as business has become increasingly digital and competitive, organizations must prioritize creating and protecting intellectual property to maintain their competitive advantage against some of the world's most dominant corporations, argues Harkins.
"The world has become an incredibly competitive place. It always has been, but companies like Amazon have changed the landscape and created new challenges that companies face to drive revenue," he says. "If a company or individual has a new idea, it's important that that is not shared with people who could steal or replicate that idea before the company is ready to move forward."
Froman adds that in addition to the increased value of intellectual property in the modern economy, the prioritization of data privacy and concerns organizations have about reputation management have driven the increase in the use of NDAs.
Worker concerns
While all of those CNBC Make It spoke with agreed that NDAs have the potential to be a reasonable tool for modern organizations, many also said they can place uncomfortable pressure>Who benefits from an NDA?
For reasons such as these, workers should be sure to read any legal document carefully, consult with a legal professional when applicable and ask questions if they have any. Because ultimately, organizations are the ones who benefit from NDAs the most.
In the case of workplace harassment or discrimination, Froman says NDAs are difficult to legally enforce and should not hold individuals back from speaking out.
"If somebody has legitimate evidence of abuse, I don't think an NDA would ever stand to stop them from addressing it," he says. "NDAs have just become an extra layer of protection for an employer."
In general, Froman says that it is rare for organizations to seek legal means to enforce an NDA because it can be hard — and expensive — to prove an NDA has been broken. And yet, they continue to be a go-to defense measure for organizations, including when letting workers go, as a means to protect their reputation.
"The company typically benefits [the most,]" from an NDA says Harkins. "They are protecting themselves from having sensitive or confidential material shared outside of the organization."
"I don't know how necessary NDAs really are. I think they just can make a company or organization feel safer," says Mosley. "But when it comes to a legal document I think it's most regular people are at a disadvantage. We live in an age where you're presented with Terms and Conditions every time you do anything — and nobody is reading those."
