Three Things to Know Before You Sign an NDA

Key Takeaways

• Nondisclosure agreements (NDAs) aim to protect a company’s confidential information.
• For software-related jobs, NDAs typically cover company-generated code, algorithms, processes, and architectures, as well as sensitive business information and practices.
• For new employees, ensuring that you understand the NDA before you sign it is key to protecting both the company’s interests and your own.
• Nondisclosure agreements (NDAs) between companies and employees make sense, but examining one from the employee side of the desk can be disconcerting—especially if you work on your own projects outside those day job hours or plan to launch future products of your own.

Here, we outline NDA basics, as well as three elements to examine to ensure that you understand what you’re signing. We also suggest an ongoing practice to help protect your ongoing and future personal interests.

NDA Basics

An NDA is a legally binding contract between you and your prospective employer that protects sensitive company information. Specifically, it gives the company legal standing against you if you share or use its confidential information outside the boundaries of your job.

In a software engineering context, this confidential information might include unique algorithms, source code, testing strategies, architecture designs, and product specifications, as well as business information such as marketing strategies and client lists.

NDAs are common in the tech industry at onboarding, and some companies may require you to sign a separate, short-term NDA during the interview process (typically after you pass the first phase). Doing so lets them disclose information about their projects—and the work you’ll be doing if hired—without the risk of having any sensitive information immediately released into the wild.

NDAs: Three Things to Watch For

So, you have a job offer from a good company, and the salary and benefits questions have been resolved. And now … you’re staring down the NDA agreement. To protect yourself and your future interests, make sure that the following three areas are clearly defined before you sign:

• Protected information: Is the scope of the information covered by the NDA clearly defined? An overly broad NDA—such as one that covers “any or all sensitive data”—or one that’s otherwise vaguely worded is a red flag. If the company is not clear on what’s covered, or you’re simply not sure, ask. Clarity is essential here; lacking it, you might inadvertently breach the agreement through disclosures to others. It can also leave you vulnerable to company overreach into your personal projects or future plans.
• Limits on its use: Is what you can and can’t do with the protected information clearly defined? The NDA should indicate how you’re expected to protect sensitive information, how and with whom you can share it within the company, and how and when you dispose of it in emails, databases, and so on.
• NDA duration. NDAs cover your time at the company, and some extend beyond it. How long an NDA lasts depends on the information’s sensitivity; it might last for a year after you leave the company. Or, if a company deems some information particularly sensitive to its success, the NDA might be binding for five years or more. In any case, make sure it states, and that you understand, the time period it covers.

One Thing to Do

Many software engineers participate in open source and other projects, including late-night coding passion projects they do all on their own. Some may dream of launching their own products in the future.

If you fall into any of those categories, consider taking the following steps to catalog and protect your off-hours work—which presumably will not include sensitive company information:

• Write up an inventory of key projects you worked on before joining the company, and include the code, algorithms, and methods you used.
• Keep records of any ongoing or new personal projects, including a general definition of the project, as well as tracking versions, logs, and dates as you work on it.

Ask the Right Questions, in the Right Way

Some companies have carefully crafted NDAs, while others might simply be generic NDA templates for software jobs with little customization.

In the latter case, you’re likely to have questions. Ask them. It helps if your driving goal is not to protect yourself or rail against perceived overreach or privacy invasions, but rather simply to understand the agreement terms.

As with issues in employment agreements, when approached right, raising questions about the NDA can raise your profile in a good way—if you focus on emphasizing clarity and a desire to protect the hard work of everyone involved.