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Hiring independent contractors can be a great way to get the help you need for short-term projects. At times, in order for the contractor to complete the work, you’ll need to share with them certain confidential or sensitive business information. In that case, it’s important to notify independent contractors of limitations to their out-of-work conversations with a signed Independent Contractor Non-Disclosure Agreement.
An Independent Contractor Non-Disclosure Agreement, also known as an independent contractor confidentiality agreement, is a vital part of the on-boarding process when sensitive information of any kind will be shared as part of that independent contractor’s work.
An Independent Contractor Non-Disclosure Agreement is a legally binding document that protects a client’s proprietary information by prohibiting an independent contractor from disclosing the specified information.
In the ordinary course of an independent contractor-client relationship, the contractor may become privy to the sensitive information of the client. As an employer with business interests to protect, an independent contractor non-disclosure agreement provides legal recourse in the event there is an unauthorized disclosure of sensitive information.
The independent contractor non-disclosure agreement is fairly straightforward and easy to understand:
Recitals: This section describes the who, when and why of the non-disclosure agreement.
Who are the parties to this agreement? - This agreement is designed for use by an employer and an independent contractor.
When is the agreement effective? - The agreement will be in effect as of the date you specify in the recital section.
Why is the agreement being created? - The purpose of the agreement is to protect the confidential information that may be disclosed to the independent contractor by the client in the ordinary course of their business relationship.
Confidential Information: The agreement defines what constitutes confidential information.
What is confidential information? - In general, confidential information is knowledge not generally known to the public or competitors that, if disclosed, may negatively affect a party’s competitive ability. Confidential information takes many different forms such as trade secrets, sales leads, knowledge of internal operations, and business strategies, to name a few. The non-disclosure agreement gives many examples of types of confidential information, but, if you believe the definition is not broad enough, you may give specific examples of the confidential information you seek to protect.
Confidentiality Terms: The main provisions of the agreement address the actions the contractor must refrain from taking with respect to the confidential information.
By signing this agreement, what action must the contractor refrain from taking? - By signing this agreement, the contractor is agreeing that they will not:
Disclose the confidential information of the client;
Use the confidential information for their benefit;
Keep any confidential information after the term of this agreement; or
Use the information to interfere with the client’s business (optional);
Term & Termination: You must describe how long the agreement will be valid.
How long does this agreement remain in effect? - At minimum, the agreement will remain in effect for the duration of the contractor-client relationship. You may choose to have the confidentiality obligations survive for a specified period after the end of the contractor’s tenure.
General Clauses: The remainder of the agreement contains generic terms defining the rights between the parties, what to do in case there is a dispute regarding the contract, and instructions about how to interpret the contract.
Signatures: Both the client and the contractor must sign the agreement to make it legally effective.
Generally, an Independent Contractor Non-Disclosure agreement does not need to be notarized – you only need to sign the document to make it legally enforceable. A witness may be helpful if the other party attempts to contest the document, but a notary is not necessary.
Please Note: The use of a notary ensures that no one challenges any signatures later and is a secure way to firmly establish the effectiveness of your document.
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