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I've been given a non-disclosure agreement (NDA) to sign by my current employer that I do not want to sign. It is incredibly open ended and I feel that it should have been a condition of my initial employment agreement, which I signed three weeks ago.

The document contains very many definitions in the form of "including but not limited to," and "directly or indirectly."

As well, it states that:

  • I agree that any breach of the contract would inflict irreparable harm on the company (I agree that a breach may result in harm to the company but not necessarily irreparable harm).
  • Should the document be amended any time in the future and I refuse to sign the amendment that I would be in violation of its terms.
  • Everything I develop while under the company's employment is its property (neglecting to say whether what I develop on my own time, distinctly from my work, is my own).
  • After my employment ends at the company I would be required to continue my duties there to assist in the perfection of its software, that I would not be allowed to perform any duties directly or indirectly related to my duties there for one year after my employment at the company ends (would I not be allowed to engineer software for a year?).
  • Should the company decide to prosecute me for breach of contract that I agree not to defend myself, and that all terms in the document would be transferred to any company which purchases the one I work for without my consent.

In short, they would legally own me for life and could absolutely destroy me for any reason they deemed fit.

Are there any legal arguments that I could use to defend myself against signing the contract? For example, the fact that the NDA was not part of my initial employment agreement or that the document is intentionally abstract and vague to allow them to fill in the blanks any way they please?

The company hosts the entirety of its source code on a site which employs a publicly accessible SCM and greatly embraces open source software — the chances that I would ever come in contact with information that could legally be considered a "trade secret" or "confidential information" is very slim, so why would I need to sign the NDA? I do not believe that many of the employees there actually took the time to understand the NDA before they signed it, and know for a fact that a few of them did not.

Are the terms of this agreement commonplace among the software engineering community?

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It depends on the laws of where you live but most likely many of the clauses can't be legally enforced, such as you promising not to defend yourself. If you sign a contract saying that you'll let the company eat your arm (literally) if they want to, and then they do, trust me that they'll be prosecuted anyway =) –  Andreas Bonini Sep 15 '11 at 9:08
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This is ridiculously abusive. Stay away from them. –  quant_dev Sep 15 '11 at 10:32
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So they want you to accept a contract which requires you to relinquish all of your legal rights, be effectively unemployable for a year after you leave, and continue working for them even after they have stopped paying you? Why are you still there? Clearly they view their employees as nothing more than property, and that attitude will be reflected in the way they treat you every day. –  OrbWeaver Sep 15 '11 at 10:38
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Doesn't the US Law have the concept of unfair contract terms? As far as I can see, half of the things you mention would just be thrown out as patently unenforceable in UK courts. –  Mark Booth Sep 15 '11 at 13:22
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This clause is so beautiful!!! "Should the document be amended any time in the future and I refuse to sign the amendment that I would be in violation of its terms." –  Chris Cudmore Sep 15 '11 at 17:08

10 Answers 10

up vote 43 down vote accepted

The clauses you mention come from several different standard contracts.

An NDA basically covers "anything we tell you, you can't tell to anyone else, no matter what". There are some standard exceptions to this (which should be explicitly listed in the NDA). These standard exceptions are:

  • Publicly available knowledge from some other source.
  • Things that you have learned independently from some other source.
  • Anything the company gives you permission in writing to talk about.

The NDA covers things such as company secrets, know-how, source code, and other bits of knowledge. And a company absolutely can suffer irreparable harm if some of these things are made public. No company will employ you without having you sign one, and you generally won't be able to negotiate any of the points on this -- your choices will probably be to either sign it, or not work for the company.

Now, you bring up a few other clauses, notably an Intellectual Property Assignment device, which assigns rights to what you develop to the company. Most (but not all) companies include a clause in that which states "which relates to the business of the Company". If that's there, and your home project doesn't have anything to do with the work done by the company, then you're pretty much okay. If not, then you may be able to negotiate to amend the contract; companies are usually far more willing to amend this part of the contract, than the NDA. (I've had success at modifying exactly this clause at my last two workplaces). But do be aware that this isn't a cut and dry issue. Lots more insightful commentary on the ownership of side-projects here: http://answers.onstartups.com/questions/19422/if-im-working-at-a-company-do-they-have-intellectual-property-rights-to-the-stu/20136#20136

Finally, you mention a non-compete clause, with a one-year duration. This is a standard clause, but with an absurdly long duration -- more usually it's a one or two month duration, but asking for a year is completely abusive. You should definitely not sign the contract in that form. Further discussion on this issue here: http://www.joelonsoftware.com/articles/fog0000000071.html

To directly answer your question: Yes, these terms are very common within the software engineering community. Though all the clauses you mentioned are standard, some of them of them sound a bit more severe than usual. The important thing is to be aware that a contract is a meeting of minds and a negotiation. You don't have to sign something if you're not happy with it, and you can absolutely propose alterations to the contract before you sign it.

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fwiw - the one year is fairly common in my particular line of work (2-24 months being the typical range) –  warren Sep 15 '11 at 6:38
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I missed this phrase in my initial read of the question: "that should the company decide to prosecute me for breach of contract that I agree not to defend myself". You definitely, definitely want to get a licensed laywer in your jurisdiction to look over that clause. Relinquishing the right to legally defend yourself is NOT a standard part of an employment contract, in my experience. –  Trevor Powell Sep 15 '11 at 6:47
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"should the document be amended any time in the future and I refuse to sign the amendment that I would be in violation of its terms" - So you're required to sign everything they want. That's quite funny, too. –  maaartinus Sep 15 '11 at 7:27
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The non-compete may also be legally unenforceable - it is in the UK anyway. (I am not a corporate lawyer, but I asked one:-) –  Rory Alsop Sep 15 '11 at 12:11
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@Rory: +1 for a (far too uncommon) variation of the "IANAL"-theme. –  Joachim Sauer Sep 15 '11 at 13:19

I would tell them that you can't sign that without legal counsel, and as you didn't know they would be asking you to sign anything additional, they should cover your legal costs. Explain that you simply can't sign something that complicated without an expert to advise you.

If they refuse, don't sign it. If they cover your legal costs, let your attorney hash it out with their attorneys at their expense on both sides.

That type of agreement is commonplace. But the particular terms of your agreement are very one-sided.

If things get ugly, hire a lawyer yourself. He can explain to your employer that by springing this on you after they claim to have employed you and refusing to negotiate in good faith, they have breached the implied covenant of good faith and fair dealing in your employment contract. The implication being, obviously, that you sign that and then you work for them. Not that you sign that, and they pressure you to give up additional rights for nothing.

Also, if they want to own projects you do on your own time, they need to pay you the fair market value of those projects. There's no reason you should give it to them for nothing. Your initial salary negotiations assumed they were only buying your work time. If they want more than that, they have to pay for it. (This is more evidence they breached the implied covenant. To come back and ask for more for the same price is bad faith if they intended to do it all along.)

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and don't accept the company attorney as your expert advisor! –  Steven A. Lowe Sep 15 '11 at 6:11
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Yes, absolutely. The attorney must only represent you. (And any competent attorney would tell you that first thing anyway.) –  David Schwartz Sep 15 '11 at 6:12
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If they pay your attorney... is he/she really YOUR attorney? –  quant_dev Sep 15 '11 at 10:34
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@quant_dev: In general, yes. That appears to be regulated well in most jurisdictions. An attorney must serve the interest of the person he's working for. –  MSalters Sep 15 '11 at 10:52
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@quant_dev: Covering your legal costs is not the same as paying your attorney. You pay the attorney and then submit the bills for re-imbursement. –  cdkMoose Sep 15 '11 at 17:43

First, I am not a lawyer, so do not take this as legal advice:

If you want help understanding what it means, hire a lawyer. Plenty of lawyers will let you pay for an hour or two of their time to understand the ramifications of this NDA. Don't ask the company, as they are not impartial.

Second, you can't "defend" yourself in the way that you described it. Most programmers work under "at will" employment. You can leave at any time and they can fire you at any time. If you don't like the terms, say "no" and find a different job.

If you come to the conclusion that the NDA is a deal killer, go ahead and negotiate with the company (if you were going to leave anyway, what's the worst they can say?)

It is good you took the time to read it. For definitive answers, consult a lawyer (as opposed to, say, an online Q&A website).

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"At will" employment is US-specific. –  quant_dev Sep 15 '11 at 10:38
    
@Quant - "At will" varies from state to state within the US. –  Ramhound Sep 15 '11 at 13:00
    
Nor does "at will" necessarily mean that the employer can just get rid of you without consequences. If you refuse to sign something like that, and they fire you, they may have to pay some money for your unemployment insurance (I don't know how that works, specifically, and suspect it varies in the US). There may be other consequences, depending on locality. –  David Thornley Sep 15 '11 at 14:35
    
@quant_dev, true, but he's in South Carolina, so it is a reasonably safe assumption. –  Stargazer712 Sep 15 '11 at 15:01
    
@David Thornley, the only way that an employer will have any financial obligation after voluntary termination of employment is if you sign some form of contract ahead of time, and that is rare for programmers (in the US). Unemployment insurance usually only applies when an employee is laid off and almost never applies when an employee quits voluntarily. –  Stargazer712 Sep 15 '11 at 15:03

Since you apparently live in the US, this would be subject to US law.

US law (at least in most states -- contracts fall under state law) has a a provision that says a court cannot enforce contract provisions that are "unconscionable". Although I'm not a lawyer, my immediate guess would be that a couple of the clauses you've mentioned would be deemed unconscionable by any court -- at least those saying you agree a priori to any changes they might make in the future, and the one saying that if you're accused of violating the agreement you won't defend yourself. As such, I doubt they could enforce those clauses even if you did agree to them.

At the same time, my immediate reaction would be to run away as fast as you can. Unless other aspects of the job are extraordinarily great, I wouldn't even try to negotiate better terms. IMO, you've seen enough to know that these people are thoroughly unethical, and that is reason enough to just stay away. Even if they did eventually agree to treat you decently, the fact that they even tried to get you to agree to this indicates that it's better to move on to a better opportunity (and nearly anything, including flipping burgers, would qualify as better, in this case).

Edit:

Assuming this opportunity is in South Carolina, the following definition would apparently apply:

In South Carolina, unconscionability is defined as the absence of meaningful choice on the part of one party due to one-sided contract provisions, together with terms that are so oppressive that no reasonable person would make them and no fair and honest person would accept them.

(Quoted from the S.C. Supreme Court decision in Simpson v. MSA of Myrtle Beach.)

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IANAL

When the company I worked for was bought out by a big company, we had lots of new paperwork to go through. One of them was a medical form which said something like "I agree to allow hospitals, doctors, nurses, and anyone else to look at my medical records, insurance claims, and anything else". The "else" clauses meant that I would agree to allow anyone to see anything.

Would I make a stink? Would I submit? Would I refuse?

I figured that the personnel department was told to get a signed form K3799F from every person. So I scratched out the words I didn't like, and signed it.

People have warned me that this was not legally binding. By giving me the form the company was "making me an offer". By altering it and submitting it to them I was "refusing the offer and making a counter-offer". I didn't care whether it was legally binding, on me or on the company. The important part was that the original wording in the form was not binding on me.

Never heard any more about it. The clerks must have taken the paper and stuffed it into my employment file, probably without reading it, possibly noticing the alterations and knowing that to bring up the matter would just create more work for them.

So if you're in a similar situation, with everybody getting stuck with the same form at the same time, you can try what I did. Scratch out the parts you don't like, then sign it and hand it in. The worse that can happen is that you get called into the HR office and yelled at. But there's a really good chance that you'll never hear about it again.

Oh yes - keep a copy.

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Would it be possible that they didn't even noticed that you scratched it out and proceed to allow "anyone to see anything" anyway? Did you made them aware that you scratched it out when you handed the form back? I wonder how legally binding this really is. –  tehnyit Sep 15 '11 at 7:20
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Depends very much on the jurisdiction. I know for a fact that my local jurisdiction specifically covers such minor alterations, and does not treat them as counter-offers. In particular, if the party who wrote the original offer does not protest, the alteration stands. Striking out an "or anything else" catch-all clause usually is a minor modification, unless the preceding parts are meant as examples. –  MSalters Sep 15 '11 at 10:58
    
@tehnyit: It may not be legally binding, but if it isn't it doesn't give permission for anything. In the US, anyway, sending medical records around requires permission. It may be that, by filing the form and doing something that requires permission under it, the company would be held to have accepted the contract. Or maybe not. IANAL. See one if you want a real answer. –  David Thornley Sep 15 '11 at 14:39
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IANAL = "I am not a lawyer" (for those who don't encounter these abbreviations often). –  JYelton Sep 15 '11 at 16:23

I agree that any breach of the contract would inflict irreparable harm on the company.

Generally, this clause is added because it enables the company to get a restraining order without having to prove to the court that some damages have occured. Without this clause, it will take time to get a court hearing in order to allege damages and several months could go by before they could get their restraining order against you.

Everything I develop while under the company's employment is its property

Again, this is a common clause. Some are better worded, some I've seen appear exactly as you've summarized it here.

After my employment ends at the company I would be required to continue my duties there to assist in the perfection of its software, that I would not be allowed to perform any duties directly or indirectly related to my duties there for one year after my employment at the company ends

This is one where you push back and walk away from the table. The part before the comma says you will continue to work for free after you quit or are fired.

More and more states are enforcing non-compete clauses. You don't want to sign any that can come back to bite you. Part of what makes it so easy for companies to screw you over are social networking sites like Facebook or LinkedIn ("I started working for blah..."). In the past, they had to work in order to find this out, but now you do the work for them.

Should the document be amended any time in the future and I refuse to sign the amendment that I would be in violation of its terms.

This is another "just walk away" claws.

Should the company decide to prosecute me for breach of contract that I agree not to defend myself

This is where you crumple the thing up and throw it in the face of whoever handed it to you. Never sign anything like this. Not even if you are starving and about to die. This goes along with the "irreparable harm" clause to make getting a restraining order against you automatic to the point where the court doesn't even bother to notify you.

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lol, This is another "just walk away" claws. indeed... –  Mehrdad Sep 16 '11 at 8:38
    
+1 for "This is one where you push back and walk away from the table." That was my exact reaction when I first read that part. –  John R. Strohm Apr 26 at 17:02

Other answers recommended getting a lawyer or crossing out the terms which you don't like. I think you should just run away from them. You caught them and their tricks now, but what about the future?

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I'd give them a single chance by pointing what I'm never gonna sign and why. Maybe it was just a lapse of one idiot who should get fired at once. Or it's the company policy... then it's time to say bye bye ASAP. –  maaartinus Sep 15 '11 at 15:06

Apologies in advance, I'd put this in a comment if I had the reputation, but I'm new here.

Should the company decide to prosecute me for breach of contract that I agree not to defend myself

Does this mean you are agreeing to mandatory binding arbitration? Credit card companies like to use this trick. When the company is paying the arbitrators they rarely find in favor of the individual.

Should the document be amended any time in the future and I refuse to sign the amendment that I would be in violation of its terms.

Can this legally be put in the contract? If this would hold up in court it would give your employer carte blanche to add whatever they wanted to a new contract and force you to sign it.

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"Should the document be amended any time in the future and I refuse to sign the amendment that I would be in violation of its terms."

IANAL.

This clause is unenforceable. At the very worst, they can dismiss you for not signing the amendment, but they can't hold you legally responsible for an amendment you didn't sign.

After my employment ends at the company I would be required to continue my duties there to assist in the perfection of its software,...

Wow. Just WOW!!! "You're fired, but you have to keep showing up without pay until the release is PERFECT!"

Should the company decide to prosecute me for breach of contract that I agree not to defend myself,...

At this point, A British Army Colonel will pop up and say, "OK, Stop that, it's getting silly!" This is a fundamental violation of the principles of justice in almost any (democratic) jurisdiction.

My bet is that after consulting a lawyer, (On your own dime!) He or She will tell you to sign it, because the entire contract will be thrown out by a judge before it even gets to a hearing. Then I'd talk to the lawyer who drafted the contract, and report him to the local bar. This is the type of thing lawyers get disbarred over.

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First let’s, check I understand the problem correctly.

The issue is that you have taken the job now; I assume that you have also left your last job.

So they are giving you no option but to sign what you consider being an unreasonable contact that you did not know about when you commited to taking the job.

It is also likely that the employment contract you have signed says they can get rid of you at little or no costs to themselves within the probation period.

As they can get rid of you at little or no cost to them, they have lots of power over you, as they know you need the job you have no power over them. (Also everyone else in the past is likely to have given up and signed the NDA regardless of saying they would not, so why should they believe you are different?)

However it is very likely that the NDA is being forced on them by the head office or some investor and that it has no real life meaning, but you can’t depend on it.

From the line below is based on my understanding of English law, am not a legal expert, elsewhere in the world the legal system will be different, (even Scotland has its own legal system)

Under English law you get very few employment rights if you have not been in a job for over 2 years.

Under English law restrictions in a contact between an employer and an employee is only enforceable by the employer if it is deemed to be “reasonable” by the courts.

Under UK law if someone in a position of little power is made to sign a contract by someone (or a company) in a position of power, the contact is very hard to enforce unless the party in the position of power can show that they have not abused their power.

(None of this is the case if you are contracting var a limited company)

The company can afford a lot more legal cost then you can if there is every an issue with the NDA, however they can’t afford to have all their mangers in court on many days, so your time can be used to make it VERY costly for them if there is ever an issue.

So I would write on the NDA

  • that you are signing it under “protest”,
  • that you did not see it until 3 weeks after you took the job and resigned from the last job
  • that you have been given no option but to sign it

Then hope that the HR person doesn’t understand the value of what you have just done… If they make you sign a 2nd copy without the above, record the fact in a dated email to a 3rd party you could use as a witness.

However remember that you are expected under UK law to keep information confidential that you get as part of your employment, so in real life the NDA will make very little difference in most cases. (An employer can still get an injection against you without having had you sign an NDA.)

Do not get legal advice unless you are willing to walk away from the job if the company will not change the contract. As the process of getting legal advice will show you signed the contract with your “eye open” and therefore make it easier to enforce. (That is way it is common for a VC to pay for independent legal advice for all employees of a company they invest in, so that the new employment contact is more likely to “sick”.)

Evan the fact you have posted a question on programmers.se may weaken your defence if the company ties to enforce the NDA.

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I don't think it's a better idea to sign at all if you do not agree to the NDA. Signing it under "protest" still means that you've signed it, making it a legally poor way to excuse yourself from a contractual obligation. (NOTE: I'm not a lawyer, do not take legal advice from the Internet). –  Spoike Sep 15 '11 at 12:13
    
@Spoike, I would agree if the person has not given up his old job yet, but a man has got to eat... –  Ian Sep 15 '11 at 12:52
    
@Ian - If you sign a contract, then you have signed the contract, one must either change the contract or write an admendment of some kind. UK law does not apply to SC. I would agree that there is an implied contract between this person and their employee that they won't give out company secrets. Some of the terms of the NDA explained do not seem reasonable, legal advice is a good idea, a signed document doens't become more powerful in the US if you understand the legal speak, before you sign it. –  Ramhound Sep 15 '11 at 13:07

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