NDA (Non-Disclosure Agreement): What It Means for Employers

What it means in practice

An NDA protects information, not a job market. Employers use NDAs at hiring (often alongside an offer letter or employee handbook acknowledgment), with independent contractors, and in severance and settlement agreements at the end of employment. No single federal statute governs these contracts; several federal laws limit what an NDA can stop a worker from saying, and many states add their own rules. This entry describes the federal baseline and one state example; it is not drafting guidance.

NDA vs. non-compete vs. trade secret. An NDA restricts disclosure and use of information. A non-compete agreement restricts where a person may work after leaving. A trade secret is a category of information the law protects even without a contract. The Defend Trade Secrets Act (DTSA) defines a trade secret as business, technical or financial information whose owner has taken reasonable measures to keep it secret and that derives independent economic value from not being generally known or readily ascertainable (18 U.S.C. 1839(3)). Under the DTSA, an injunction may not prevent a person from entering an employment relationship, and any conditions on that employment must rest on evidence of threatened misappropriation, "not merely on the information the person knows" (18 U.S.C. 1836(b)(3)(A)).

Who is covered. Coverage differs by law. For the DTSA notice, "employee" includes anyone performing work as a contractor or consultant (18 U.S.C. 1833(b)(4)). The NLRB says the National Labor Relations Act (NLRA) does not cover government employees, agricultural laborers, independent contractors and supervisors (with limited exceptions), so its limits apply to agreements with covered employees, not managers who are supervisors.

The DTSA whistleblower immunity notice. Under 18 U.S.C. 1833(b), an individual cannot be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in confidence to a federal, state or local government official, or to an attorney, solely to report or investigate a suspected violation of law, or in a court filing made under seal. The statute requires an employer to give notice of this immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. An employer complies if the agreement cross-references a policy document given to the employee that sets out its reporting policy for suspected violations of law. The notice rule applies to contracts entered into or updated after May 11, 2016.

What happens if the notice is missing. The statute does not void the NDA; the employer may not be awarded exemplary damages or attorney fees under 18 U.S.C. 1836(b)(3)(C) or (D) in a DTSA action against an employee who did not receive notice. For willful and malicious misappropriation, a court may otherwise award exemplary damages of up to 2 times the compensatory damages, plus reasonable attorney fees. A DTSA civil action must be brought within 3 years after the misappropriation is discovered or should have been discovered (18 U.S.C. 1836(d)).

The Speak Out Act. Signed December 7, 2022, the Speak Out Act (42 U.S.C. 19401-19404) says that in a sexual assault dispute or sexual harassment dispute, no nondisclosure clause or nondisparagement clause agreed to before the dispute arises is judicially enforceable where the conduct is alleged to violate federal, tribal or state law. A "nondisclosure clause" is a provision requiring the parties not to disclose or discuss conduct, the existence of a settlement involving conduct, or information covered by the agreement. A "nondisparagement clause" bars negative statements about another party relating to the agreement, claim or case. The Act applies to claims filed on or after December 7, 2022.

What the Speak Out Act does not do. It reaches only clauses agreed to before the dispute, so a confidentiality term negotiated in a settlement after a dispute arises is outside its rule. It does not prohibit an employer and employee from protecting trade secrets or proprietary information. It also expressly leaves room for state laws that are at least as protective of the right to speak, so state law may go further. A companion 2022 law, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (Pub. L. 117-90), makes predispute arbitration agreements and joint-action waivers unenforceable in those disputes at the election of the person alleging the conduct; see alternative dispute resolution (ADR).

The NLRA and severance agreements. Section 7 of the NLRA gives employees the right to engage in concerted activities for collective bargaining or "other mutual aid or protection," in union and non-union workplaces. In McLaren Macomb (February 21, 2023), the Board considered a severance agreement offered to 11 furloughed employees. One clause barred them from disclosing the agreement's terms to "any third person," except a spouse, professional advisors, or when legally compelled. Another barred statements to coworkers or the public that "could disparage or harm the image" of the employer. The Board held that merely offering the agreement violated Section 8(a)(1), because the clauses would restrain employees from talking with coworkers, a union or the Board, or from filing charges and assisting investigations. It said such terms are unlawful unless narrowly tailored to respect Section 7 rights, and overruled the 2020 Baylor and IGT decisions.

Current NLRB status. GC 23-05 (March 2023) was the then-General Counsel's guidance to regional offices on McLaren Macomb, not the views of the Board. On February 14, 2025, Acting General Counsel William Cowen's GC 25-05 rescinded it, along with the non-compete memos. Rescinding a memo does not overturn a Board decision. In Prime Communications (April 7, 2026), the Board found that severance agreements with overly broad nondisparagement and confidentiality provisions violated Section 8(a)(1); two members said they applied McLaren Macomb "as extant precedent" and would be open to reconsidering it in a future case. No overruling decision was found on nlrb.gov as of October 2026; check there for later changes.

EEOC charges and investigations. The EEOC says a severance agreement may release claims, but no agreement can limit an employee's right to file a charge or to testify, assist or participate in an EEOC investigation, hearing or proceeding under Title VII, the ADEA, the ADA or the Equal Pay Act; such provisions are invalid and unenforceable. The EEOC adds that an employer cannot require an employee to return severance pay before filing a charge, although an employee can waive the right to recover money in their own lawsuit or one the EEOC brings. EEOC guidance also treats obtaining a promise not to file a charge or assist the Commission as unlawful retaliation. For age claims, 29 CFR 1625.22(i) bars any waiver provision that prohibits filing a charge with the EEOC or participating in its investigations, or that imposes a penalty or condition on doing so.

Severance agreements and age waivers. Confidentiality terms often sit in the same document as a release. When that release covers claims under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act adds minimum requirements. Under 29 CFR 1625.22, the employee must have at least 21 days to consider the agreement (45 days for a group exit incentive or termination program), running from the employer's final offer, and at least 7 days after signing to revoke. The 7-day revocation period cannot be shortened.

SEC whistleblower rule. SEC Rule 21F-17(a) (17 CFR 240.21F-17) says no person may take any action to impede an individual from communicating directly with Commission staff about a possible securities law violation, including enforcing or threatening to enforce a confidentiality agreement about those communications, with a narrow exception for certain information related to legal representation of a client.

Where states differ. State rules vary widely, so check your state legislature or labor agency. As one example, Washington's RCW 49.44.211 makes void and unenforceable a provision in an agreement between an employer and employee not to disclose or discuss conduct, or the existence of a settlement involving conduct, that the employee reasonably believed to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is against a clear mandate of public policy. It covers employment, contractor and settlement agreements with current, former and prospective employees and contractors. It still allows a provision that keeps the settlement amount confidential, and protection of trade secrets, proprietary information or confidential information that does not involve illegal acts. Asking an employee to sign a prohibited provision, or trying to enforce one, is itself a violation, and an employer is liable for actual damages or statutory damages of $10,000, whichever is more, plus reasonable attorney fees and costs.

Worked example: a hiring NDA and a later harassment claim. An employee signs a confidentiality and nondisparagement agreement at hiring in 2024. In 2026 she files a sexual harassment claim under federal law. Because the clauses were agreed to before the dispute arose and the claim was filed after December 7, 2022, the Speak Out Act makes them not judicially enforceable as to that dispute. If the parties later settle and agree to keep the settlement confidential, that post-dispute term falls outside the Speak Out Act's rule, but the EEOC limits on charges and participation still apply, and a state such as Washington may restrict it further.

Worked example: the missing DTSA notice. A company updates its employee confidentiality agreement in 2025 without the immunity notice or a cross-reference to a reporting policy. It later sues a former employee under the DTSA, and a court finds willful and malicious misappropriation causing $100,000 in actual loss. With proper notice, the court could have added up to $200,000 in exemplary damages (2 times $100,000) and attorney fees. Without notice, the company remains eligible for the $100,000 and an injunction, but not exemplary damages or attorney fees against that employee.

Worked example: a severance review period. An employee aged 55 receives a final severance offer, including a confidentiality clause and an ADEA release, on Thursday, October 1, 2026. Day 21 is Thursday, October 22. If he signs that day, the 7-day revocation period runs through Thursday, October 29, and the EEOC's sample agreement language has the agreement take effect on the eighth day, Friday, October 30.

What employers track. Because the DTSA notice turns on when an agreement was entered into or updated, and severance terms carry review and revocation periods, the practical work is keeping records of which version each person signed and when. Common checkpoints include onboarding paperwork, policy updates and offboarding.

FAQ: Can an NDA stop an employee from reporting to a government agency? Not under the laws above. The EEOC says agreements cannot bar charges or participation in its investigations, the NLRB treats broad gag clauses as restraining Board charges, SEC Rule 21F-17 bars impeding communications with SEC staff, and the DTSA grants immunity for confidential disclosures to government officials to report suspected violations of law.

FAQ: Does at-will employment change any of this? No. At-will employment concerns ending the relationship; it does not make an otherwise unenforceable or unlawful NDA term valid.

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