Speaker 1: HR Party of One is brought to you by Bernie Portal, an all-in-one HRIS that helps you strategize your role. In this episode, let's talk about non-disclosure agreements. Have you ever heard the phrase, crossing the Rubicon? It's an ancient reference to passing the point of no return, just like Julius Caesar did when he broke his promise to the Roman Senate and invaded Rome, declaring himself emperor. Not all broken promises are as high stakes as changing the fate of modern society, but a broken promise in your organization could result in serious economic consequences. That's why you should consider non-disclosure agreements, your best legal route to preventing broken promises. Only some people work in an industry where non-disclosure agreements, or NDAs, are commonplace. But as technology advances, your organization will likely need to protect itself against the pitfalls of an increasingly social and interconnected world. You can keep fights out of the courtroom by strengthening your onboarding process with an NDA. In this episode of HR Party of One, we'll do a deep dive into NDAs, covering the different kinds available and what may best fit your organization's needs. By the end, you'll understand the purpose and limitations of NDAs and know how to use them legally and ethically so your onboarding process builds the best foundation of employment in your organization. Today we'll discuss what an NDA is, the different kinds and uses of NDAs, and if NDAs are legal and ethical. Let's get started. What is an NDA? NDAs are non-disclosure agreements, meaning do not disclose or share protected information. Some protected information, like copyrights and patents, are filed with a government agency. Not all info is under government oversight and guard. Secret information that is not registered with a government agency is classed as a trade secret, defined by the Uniform Trade Secrets Act, UTSA, as information that derives independent economic value because it is not generally known or readily ascertainable and is the subject of efforts to maintain secrecy. Sometimes it's challenging to determine what is considered a trade secret and what isn't. NDAs bridge the gap of understanding and define exactly what information can and cannot be disclosed. If someone shares a trade secret, intentional or otherwise, that information is considered misappropriated. Misappropriation also includes when someone acquires or shares information understood as secret or behaves in a way that could share information. For example, suppose your onboarding process requires new hires to sign paperwork affirming they can only work on certain accounts in office on company hardware. In that case, the guy logging in on his personal laptop at home to finish a few edits is at risk of trade secret misappropriation. We always encourage caution with sensitive company info, but an NDA takes it from encouragement to requirement. When acquired improperly, an NDA enables employers to pursue legal action against the one who misappropriated the trade secret. They aim to protect your organization's information by instructing how to manage trade secrets appropriately and potentially enforcing legal consequences for misappropriation. While the power imbalance seems stark, NDAs also benefit your employees. They outline clear expectations around data and information security and are sometimes necessary to secure a great new position with more responsibility. But there are different types and some are to the employee's benefit. So let's cover the three kinds of NDAs, the different kinds and uses of NDAs. There are three categories of NDAs, unilateral, bilateral, and multilateral. As HR, you're more likely to deal with unilateral NDAs, but we will give an overview of all three categories, their purpose, and some examples. Unilateral NDAs are between only two parties. One party is preventing the other party from sharing the predetermined information. These parties range between several groups like employers or inventors, each with a different NDA. There are four common types of unilateral NDAs, employer-employee NDA. These are like what we discussed. They protect trade secrets and other sensitive data. So their purpose is to protect the organization if an employee or former employee shares info they shouldn't. For example, a software company may have developers sign an NDA so competitors can't poach employees to steal the organization's best tricks to gain an advantage in the market. Company contractor NDAs. If contractors working in your office are around documents, hardware, software, or employees as they chat with one another over breaks, they can glean confidential information. An NDA for contractors will ensure anything they overhear, see, or read is kept under wraps and legally protected. If you're worried about employees unintentionally revealing confidential material, you can explain it in your culture guide, the risks of speaking carelessly, as well as workplace security to implore caution. If you need to refer employees back to the rules they agreed to follow, use an HRIS like Bernie Portal to catalog compliance requirements and collect signatures. That way, everyone knows your confidentiality and security needs possible through the use of an HRIS. These NDAs protect anything confidential during the business arrangement between contractor and company as well, including private financial information discussed while hiring or accounts payable amounts. They can also enforce standards of behavior if necessary. For example, massive productions like the HBO hit Game of Thrones use NDAs to prevent contractors from taking pictures on set. Production leaks can impact the economic future of a project as many people develop uninformed opinions based on the pictures uploaded online. In some circumstances, the pictures even go viral, and the poor reception may convince fans to boycott the project. Inventor Evaluator NDAs When people sell their inventions, the buying company has an evaluator check them for efficiency, plant utility, mass production capability, and more. But an evaluator could steal and recreate the idea under the company's umbrella, so the inventor gets nothing. Inventor Evaluator NDAs protect the inventor's idea from theft and data the company wants to keep secret, such as financial forecasting. For example, if a woman develops a great alternative to electric engines, an NDA would help her rest easy knowing her idea can't be stolen while marketing it for sale. Seller Buyer NDA When selling a product or service, sensitive info may be exchanged. This NDA protects the buyer and seller from the other party sharing confidential information. This could include business operations or production processes, computer technology, and intellectual property. For example, if an organization arranges the sale of their old computers to a new organization, an NDA would protect the seller's organization if any tech wasn't wiped properly and still contained secret information. Depending on your size and industry, some or all of these may be common in your organization. Bilateral NDAs and multilateral NDAs are more complicated, but are still essential to note if your business deals with other businesses often. Bilateral NDAs This type of NDA is when each party shares information. The mutual flow of info is standard during business acquisitions, mergers, corporate takeovers, or joint ventures. It ensures the business venture is more likely to succeed as each side is open to sharing details that progress the end goal. For example, if a larger sports company acquires a smaller performance brand to add clothing items to its line, then a bilateral NDA would ensure each side shares relevant financial information, marketing strategies, product designs, and more. Multilateral NDAs serve in place of using many unilateral or bilateral agreements. This confidentiality agreement covers every side, whether there are three involved parties or more. It aims to ensure confidentiality for information that could impact negotiations going forward. For example, if two companies split the purchase of a third company, a multilateral NDA would protect the flow of information as the parties decide locations to keep open, which employees to retain, how to absorb incompatible software, etc. Protecting this info prevents the market from reacting to untimely and unprepared news. Plus, it could help keep the employees of each company more secure as the info is better controlled. Are NDAs legal and ethical? While the news is filled with stories about labor boards working to ban or limit the use of NDAs, they are still here to stay for now. But there are some considerations to ensure you're handling your NDAs the right way. Make sure you have it for the right reasons. Don't use frivolous NDAs to try and lock down all speech about your company or projects. Identify what secrets are critical to organizational success and use an NDA to ensure control of that information. Factors that affect how enforceable your NDA is include overly broad language, illegality, lack of consideration, unconscionability, risk to public health and safety, confidentiality issues, duress, and misrepresentation. Use a lawyer to draft your NDA. NDAs are legal documents first and foremost, and you need a legal expert to tick every box on the NDA writing checklist. Using a lawyer also grants you a reprieve from liability as you have the expert on your side and can check that there are no loopholes. Also, a good relationship with your NDA lawyer will help if someone breaks their confidentiality agreement. Introduce the NDA early on. An NDA protects your organization's most critical secrets, so lay down the law with candidates or new hires as early as possible. Establish employee expectations by including an NDA in your interview process or onboarding documents. You can add a customized stage to your hiring process covering the NDA and its purpose by using Burning Portal's Applicant Tracking feature. Rest assured that interviewing managers cover all the vital employment requirements every time. You can also use our in-house messaging between applicants and hiring influencers to keep the conversation about trade secrets in a protected, private space. Check the link below for more information on how an Applicant Tracking feature can keep you compliant. If you don't include an NDA in your hiring process, you can put it in your onboarding process. Burning Portal houses all necessary compliance documents so you can find them easily, store them safely, and ensure new hires read and understand your onboarding documents. If a new hire doesn't sign the NDA, Burning Portal doesn't let them move to the next onboarding step so you know if any of your people haven't yet agreed to protect trade secrets. You can check out the free onboarding survival guide linked in the description for more onboarding musts and a link to how building a robust onboarding process using an all-in-one HRIS can protect your organization. You may wonder why HR should know about NDAs. Isn't that a job for your legal team? The reality is that HR is like an iceberg. Much of what you have to do is beneath the surface of your other responsibilities. Academy to Innovate HR, a leading educator on HR topics and industry know-how, has this graphic to better understand what I mean. You can see assuring compliance, designing policies, and analyzing data all sitting beneath the surface. Managing NDAs is a mix of many duties and figuring out your organization's ethical consideration falls neatly into each category. Your organization has specific needs that you must fulfill, so developing clear and supported reasoning for using or updating NDAs may depend on your knowledge of your organization, workforce, and industry. You're also the one who writes and maintains your organization's culture guide. Include language that defines NDAs and guides what constitutes a trade secret within your organization. Keep an eye on the news for any changing legislation about NDAs. President Biden passed the Speak Out Act in early 2023, which disavows NDAs created to silence victims of sexual harassment. I included a link in the description for more info on this legislation. You know best what your organization needs to protect itself now and in the future. An NDA can prevent trade secrets from falling into the wrong hands, and now you have the foundation you need to decide if it's time for your organization to use them. In this episode, we've covered everything you need to know about the different types of NDAs and their purposes, plus the legal and ethical considerations of using them. If you don't have many trade secrets to worry about, knowing about NDAs will better prepare you for the future of your business. Including NDAs in the applicant tracking and onboarding features of your HRIS will help you easily protect your organization and track employee compliance. Don't waste time chasing people down to sign paperwork. Know that your secrets are safe with the push of a button. As always, remember that your role is as strategic as you make it. Well, that's all the time we have for this episode. Don't forget to subscribe to our channel and ring the bell to get notifications about the latest HR Party 1 updates and new episodes.