Non-Disclosure Agreements in California: What They Really Protect

Non-Disclosure Agreements in California: What They Do (and Don’t) Cover

Non-disclosure agreements in California are powerful legal tools—but only when they’re drafted and enforced the right way. Whether you’re a business owner trying to protect trade secrets or an employee being asked to sign an NDA before your first day, one thing is certain: what you don’t know about these contracts can cost you.

And in California, where employment law leans heavily in favor of transparency and worker protections, the rules around NDAs aren’t just unique—they’re changing fast.

Let’s break down what NDAs really protect in California, what they don’t, and what you need to watch out for whether you’re signing one or trying to enforce one.

What Is a Non-Disclosure Agreement in California?

A non-disclosure agreement (NDA) is a legally binding contract that prevents one party from sharing certain confidential information with outsiders. In California, NDAs are often used in:

• Employment contracts

• Business partnerships

• Contractor relationships

• Mergers and acquisitions

• Intellectual property licensing

NDAs are meant to protect trade secrets, proprietary processes, client lists, or sensitive business data. But the scope of what can legally be kept “confidential” has limits in California—and those limits matter.

What Can Be Protected by an NDA in California?

California does allow NDAs to protect legitimate trade secrets—like your software source code, proprietary marketing strategies, or a unique recipe your business developed. Under the California Uniform Trade Secrets Act (CUTSA), this type of information must:

• Have commercial value because it’s secret

• Not be generally known to the public

• Be subject to reasonable efforts to maintain secrecy

If your NDA is clear, narrowly written, and specific about what it protects, it’s far more likely to be enforceable.

What Can’t Be Protected by an NDA?

This is where many people get tripped up. California law puts strong limits on NDAs that attempt to:

• Prevent employees from discussing their wages

• Conceal workplace harassment or discrimination (especially after SB 331)

• Block whistleblowing activity

• Restrain someone from working in their field (often tied to invalid non-competes)

In fact, NDAs that silence employees about unlawful conduct—like sexual harassment or wage violations—are often unenforceable and may even violate public policy.

California’s “Silenced No More Act”

Thanks to the Silenced No More Act (SB 331), California now prohibits NDAs that prevent workers from speaking out about:

• Harassment

• Discrimination

• Retaliation

• Wage and hour violations

Even if an employer settles a case and asks for confidentiality, any clause that restricts a worker’s ability to discuss these issues is likely invalid.

When Are NDAs Enforceable in California?

A non-disclosure agreement is enforceable when it:

• Covers legitimate confidential information

• Doesn’t attempt to silence illegal conduct

• Is specific in scope and duration

• Doesn’t restrict someone’s legal rights or employment future

A vague or overly broad NDA won’t hold up in court. Neither will one that attempts to scare someone into staying quiet about serious misconduct.

Why California Businesses and Professionals Trust Wright Law Corporation

At Wright Law Corporation, we’ve helped Sacramento businesses draft airtight NDAs—and helped employees push back on the ones that crossed legal lines. Whether you’re protecting your competitive edge or trying to understand your rights, we’ll explain the law in plain English and help you take action with confidence.

When it comes to non-disclosure agreements in California, don’t rely on generic templates or wishful thinking. Get it right. Because the fine print is where your leverage—and your liability—lives.

Conclusion: NDAs Are Powerful—But Only When They Follow the Law

NDAs can protect your ideas, your company, and your reputation—but only if they’re enforceable under California law. If you’re being asked to sign one, or you’re looking to draft or enforce one, make sure it does what it’s supposed to do—and doesn’t violate state labor protections in the process.

When in doubt, call a lawyer. That one call could protect years of hard work.

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References:

California Uniform Trade Secrets Act – Cal. Civil Code §§ 3426–3426.11, available at https://leginfo.legislature.ca.gov
California Senate Bill 331 – Silenced No More Act, available at https://leginfo.legislature.ca.gov
California Department of Industrial Relations – Wage Discussions Protection, available at https://www.dir.ca.gov/dlse/faq_wages.htm