## Non-disclosure agreements in Alabama A **non-disclosure agreement (NDA)** — also called a confidentiality agreement — is a contract that requires one or both parties to keep specified information confidential. Used everywhere in business: for trade secrets, hiring processes, M&A negotiations, software development, and (controversially) in settlement of harassment claims. ### Alabama-specific limits General contract law applies. ## Two main flavors **Mutual NDA** — both parties agree to keep each other's confidential information secret. Used when both sides will exchange sensitive information (M&A negotiations, partnerships). **One-way NDA** — only one party (the recipient) is bound to keep the disclosing party's information confidential. Used when only one side has the sensitive information (job interviews, vendor evaluations, contractor agreements). ## What a good NDA covers Essential terms in any well-drafted NDA: 1. **Definition of confidential information** — broad enough to capture what matters; narrow enough to be enforceable 2. **Carve-outs** — public information, independently developed, lawfully obtained from third parties, court-ordered disclosure 3. **Permitted use** — exactly what the recipient can do with the information (evaluate, perform services, etc.) 4. **Permitted disclosure** — to specific people who need to know (employees, advisors) under the same restrictions 5. **Term** — duration of the obligation (often 2-5 years; trade-secrets typically perpetual until publicly known) 6. **Return / destruction** — what happens to materials at the end of the engagement 7. **Remedies** — injunctive relief is critical (money damages alone don't fix leaked information) 8. **Choice of law / forum** — what state's law applies and where disputes are decided 9. **Whistleblower carve-out** — required by federal Defend Trade Secrets Act (2016) for trade-secret NDAs ## Federal Defend Trade Secrets Act (DTSA, 2016) Federal law requires every NDA covering trade secrets to include a **whistleblower notice** informing the recipient that they may disclose trade secrets: - To a federal, state, or local government official, OR an attorney, in confidence, for the sole purpose of reporting or investigating a suspected violation of law - In a complaint or other document filed under seal in a lawsuit Failure to include this notice means you can't recover punitive damages or attorney's fees in a DTSA case. ## Common scenarios where NDAs are used - **Employment** — protecting trade secrets, customer lists, technical know-how - **M&A** — confidential disclosure of financial information, contracts, IP during due diligence - **Vendor / contractor agreements** — protecting customer data, internal systems, pricing - **Investor pitches** — limiting disclosure of business plans (some VCs refuse to sign NDAs at the seed stage) - **Software development** — protecting source code, architecture, algorithms - **Joint ventures and partnerships** — exchanging confidential info to evaluate the deal - **Settlement agreements** — limiting public discussion of disputes (heavily regulated in employment contexts) ## What kills NDA enforceability - **Definition too broad** — "all information disclosed" is unenforceably vague in many courts - **No legitimate business interest** — courts won't enforce purely punitive secrecy - **Public-policy violation** — NDA can't be used to cover up illegal conduct, harassment (in many states), or whistleblowing - **Information was already public** — the carve-out clause matters - **Information was independently developed** — recipient already knew it - **Unreasonable duration** — perpetual NDAs face skepticism for non-trade-secret info - **No consideration** — the recipient must get something in return for signing ## NDAs in employment after #MeToo The post-2017 reform wave changed NDA law dramatically in employment settings. Many states now ban or restrict NDAs covering: - Sexual harassment claims - Sexual assault claims - Workplace discrimination based on protected categories - Retaliation claims - Wage-and-hour violations (in some states) **Federal:** the Speak Out Act (2022) bans pre-dispute NDAs covering sexual harassment / sexual assault — preventing employers from requiring agreement BEFORE a claim arises. ## When you're asked to sign one **As an individual:** read it. NDAs you sign for a job typically follow you forever. Look for: - How long the obligation lasts (perpetual vs limited term) - What happens to your knowledge if you leave - Whether the definition of "confidential" reaches things you'd consider general industry knowledge - Whether non-compete or non-solicit obligations are bundled in - Whether a forum/choice-of-law selection puts you at a disadvantage **As a business:** use NDAs that are tailored to the situation. Boilerplate NDAs are weak. Have a business attorney customize them. ## What you should do Get a Alabama business attorney involved before drafting an NDA, before signing one with significant consequences, or before pursuing a breach claim. Most Alabama business attorneys offer flat-fee NDA review and drafting packages. --- *This guide is general information about Alabama law as of early 2026 and is not legal advice. NDA law is rapidly evolving — multiple states have reformed their NDA statutes since 2018, especially around employment matters. Talk to a licensed Alabama business or employment attorney about your specific situation.*