Nondisclosure Agreement Restrictions by State

Author: Brightmine Editorial Team

Nondisclosure agreements (also referred to as confidentiality agreements) are an important tool for businesses to protect sensitive information that is shared with employees, such as trade secrets, proprietary and customer data and strategic business plans. These agreements help organizations maintain their competitive edge in the market.

Employers may also include confidentiality clauses in a settlement or termination agreement to avoid negative publicity or damage to the company's reputation.

Nondisclosure agreements generally are enforceable in all states, but some have laws restricting their use or enforcement. While federal law also restricts nondisclosure agreements in limited circumstances, most state laws have greater applicability and carve out exceptions in certain circumstances.

The following chart provides a comparative overview of state laws regulating nondisclosure restrictions, including:

• Restrictions - Subject matter that is regulated or prohibited.
• Exceptions - Statutory carve-outs that pertain to or limit the scope of restrictions.
• Definitions - How states define terms used in the statutory restrictions and exceptions.

States that do not have a relevant provision are indicated on the chart with "N/A."

For further guidance on nondisclosure agreements and other restrictive covenants, see Employment Contracts and Restrictive Covenants.