Running a business relies on hard work, a great idea and — quite often — a trade secret or two. Small business owners in Wisconsin know how important it is to protect those trade secrets and other types of confidential information. Including a nondisclosure agreement in an employment contract is usually an appropriate option, but it must adhere to small business law in order to be effective.

Nondisclosure agreements are primarily used to protect trade secrets. Trade secrets are not covered by protections such as copyrights or patents, and are only protected by the efforts of a business and its owner/s to keep information private. So at its most basic purpose, a nondisclosure agreement creates a confidential relationship between two parties — the employer and the employee. Both parties involved in a nondisclosure agreement have a legal obligation to keep trade secrets and other confidential information to themselves.

A business owner does not necessarily need to have his or her employee sign a nondisclosure agreement for one to still exist. An oral agreement about keeping certain information private can also create the same type of confidential agreement. Even inferring whether information is meant to be kept secret might be sufficient for a confidential agreement. Proving the validity of oral agreements can be difficult though, so it is usually best to back these up with written agreements.

Running a successful business often means relying on a trade secret or two. Protecting those secrets from competitors is a top priority for many business owners, but not everyone is aware of their options for doing so. Including a nondisclosure agreement in an employment contract is usually effective. It is important that these agreements be both thorough enough to protect Wisconsin businesses while also being fair to workers. Employers who are struggling to strike this balance may find it helpful to speak with an attorney who is experienced in small business law.