Don't Let Your Employees Sign Your Counterparties' NDA

The counterparty wants you to have your employees sign their NDA. They argue that the information is sensitive, and they need this protection.

My view? Just say no. Actually, don’t just say no. Say hell no.

Here’s why.

I believe requiring your employee to sign an NDA with a counterparty is unfair to the individual.

Your company is the one doing the deal. Your company is the one signing the NDA and promising compliance with the terms. Your company is liable for the actions of your employees.

I believe we have an ethical obligation to protect our employees from these overreaches. Don’t set your employees up by creating privity and increasing the risk they are named in a lawsuit.

There are better ways to approach this concept. Make sure the NDA between the companies says:

• the parties may only share received information with employees and representatives who need to know and signed confidentiality obligations at least as restrictive, and
• the receiving party is liable for any violations by its employees and representatives.