NDA Enforceability in California: What You Need to Know
What Is an NDA?
A non-disclosure agreement (NDA) is a contract that restricts one or more parties from sharing confidential information. NDAs are ubiquitous in California's tech, entertainment, and startup ecosystems.
California's Position on NDAs
California enforces NDAs that protect legitimate trade secrets and confidential business information. The California Uniform Trade Secrets Act (Cal. Civ. Code Section 3426 et seq.) provides the primary framework for protecting confidential information, and well-drafted NDAs complement these protections.
However, California imposes important limitations. Under California Business and Professions Code Section 16600, agreements that restrain someone from engaging in a lawful profession are generally void. An NDA that is so broad it effectively prevents someone from working in their field may cross this line.
Key Enforceability Factors
- Reasonable scope — The NDA must clearly define what constitutes confidential information. Overly broad definitions that encompass general industry knowledge or publicly available information are vulnerable to challenge
- Legitimate business interest — The NDA must protect genuine trade secrets or proprietary information, not simply prevent competition
- No restraint on employment — Under Section 16600 and the Silguero v. Creteguard (2010) line of cases, NDAs cannot function as de facto non-compete agreements
- Compliance with SB 331 (Silenced No More Act) — As of January 2022, California prohibits NDAs that prevent disclosure of workplace harassment, discrimination, or retaliation
Red Flags
- The NDA defines "confidential information" to include virtually everything you learn during employment
- It has no expiration date or an unreasonably long duration
- The clause prevents you from discussing workplace harassment or discrimination
- Liquidated damages for breach are disproportionate to any potential harm
When to Consult a Lawyer
Consider consulting a California attorney if an NDA appears to restrict your ability to work in your field, covers information that is not genuinely confidential, or attempts to silence you about workplace misconduct. California's strong employee protections may provide grounds for challenge.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.