Yes, Confidentiality Agreements and Non-Disclosure Agreements (NDAs) are generally enforceable in New York, but their enforceability depends on reasonableness, scope, and compliance with public policy. The reasonableness of an NDA may differ in different situations. For example, an NDA used in a transaction to purchase a business would differ in scope from one in an employment context. For this article, we will consider the reasonableness and enforceability of NDAs in the employment and independent contractor context. Here are the key factors affecting enforceability:
- Reasonableness of Scope & Duration
- Scope: The NDA should only cover genuinely confidential or proprietary information, such as trade secrets, business strategies, or customer lists. Overly broad language attempting to cover publicly available or general industry knowledge may be unenforceable.
- Duration: Permanent NDAs may be enforceable for trade secrets, but courts may limit NDAs for non-trade secret confidential information to a reasonable time (e.g., 1-5 years).
- Consideration Requirement
- For an NDA to be valid, the employee must receive consideration (e.g., a job offer, promotion, or continued employment). If an NDA is introduced after employment starts, continued employment may or may not be sufficient consideration, depending on the circumstances.
- NDAs & Non-Compete Agreements
- If an NDA is used as a de facto non-compete, preventing an employee from working in their field, New York courts may invalidate it as overly restrictive or limits its scope and duration in an effort to balance the rights of the employer and employee.
- New York has strict limits on non-compete agreements, and courts scrutinize NDAs that indirectly function as one.
- Public Policy & Whistleblower Protections
- New York law prohibits NDAs that prevent employees from reporting illegal activities, harassment, or discrimination.
- The 2022 “Speak Out Act” (federal law) prohibits NDAs from silencing employees regarding sexual harassment and assault.
- NDAs cannot prevent employees from cooperating with law enforcement or government investigations.
- Trade Secrets Protection
- If the NDA protects legitimate trade secrets (under the New York Uniform Trade Secrets Act), it is more likely to be enforced.
Bottom Line
- Enforceable if the NDA protects legitimate business interests, has reasonable scope & duration, and complies with public policy.
- Unenforceable if it is too broad, functions as a non-compete, or restricts legally protected disclosures.
Give me a call if you are an employer seeking to write an enforceable agreement for your employees or if you are an employee being asked to sign such as agreement and we can help you understand your rights.
Tracy Jong is a Senior attorney at Evans Fox LLP with 30 years of experience focusing her practice in business law, intellectual property and licensing for alcohol and cannabis. Tracy Jong is a member of the New York Bar and is a registered attorney at the United States Patent and Trademark Office. She can be reached at [email protected].
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The content has been prepared for informational purposes only; it should not be construed as legal advice, does not create or constitute an attorney-client relationship, and readers should not act upon it without seeking professional counsel.