Can California Employers Still Enforce Non-Disclosure Agreements in 2025?

Non-disclosure agreements (NDAs) are standard in workplace contracts and are aimed at preventing sensitive company information from being shared with third parties. These agreements help prevent scenarios where former or current employees use private information to damage a company’s reputation or share its trade secrets, giving away its competitive edge. However, they can also be used to prevent employees from speaking out about workplace misconduct. This raises the issue of how far NDAs can be enforced, especially in workplace misconduct cases. As an employer, understanding these nuances is essential to protecting your business while complying with state regulations.

What Is a Non-Disclosure Agreement?

An NDA is a legally binding contract that prevents employees or other parties from disclosing confidential information that would hurt or threaten the person initiating the disclosure. It is common practice for companies to require employees to sign NDAs before starting work or during employment to safeguard trade secrets, intellectual property, and customer data. For example, if you own a restaurant that has developed a unique recipe or operation method, an NDA can prevent employees from sharing that information with competitors. Similarly, a marketing firm can use NDAs to protect client lists or campaign strategies.

Noteworthy Changes to NDAs in California

Recent legislative changes, particularly SB331, also known as the “Silenced No More Act,” redefined how NDAs can be used in California. Employers cannot use NDAs to silence employees about workplace misconduct, such as:

• Sexual harassment
• All forms of workplace discrimination
• Violations of labor laws or safety standards

What Makes an NDA Enforceable in 2025?

While California imposes strict limitations on NDAs, they are still enforceable in specific scenarios. You can use NDAs to protect:

• Trade secrets, such as recipes, algorithms, or manufacturing processes
• Customer and supplier information
• Intellectual property and proprietary business strategies.

To ensure that your NDAs are enforceable, pay attention to these key factors:

• Specificity: The agreement should clearly define what constitutes confidential information
• Valuable Consideration: Employees must receive something in exchange for signing, such as employment or bonus
• Legal compliance: NDAs cannot include provisions that violate the latest California NDA laws
• Language: Avoid overly restrictive language, as how you phrase the agreement may affect the validity of the NDA
• Time Limit: NDAs cannot be too abstract or vague without an established time limit.

When is an NDA No Longer Enforceable?

Some common scenarios in which an NDA may be invalidated, terminated, or deemed unenforceable in court include:

• Publicly Available Information: NDAs cannot protect information that is already publicly known or accessible at the time the agreement is signed
• Prior Knowledge: If the party bound by the NDA already had legitimate access to the information before signing the agreement, it may void the NDA.
• Legal or Regulatory Disclosure: An NDA can be overridden by a court order or a government mandate requiring the disclosure of confidential information.
• Reverse Engineering: If the protected information can be lawfully deciphered, reverse-engineered, or independently discovered without breaching the agreement, the NDA may lose its enforceability.
• Illegal or Unethical Provisions: NDAs that attempt to conceal criminal activity or require the signatory to participate in unlawful acts are inherently invalid. Agreements designed to suppress reports of illegal behavior are not legally enforceable.

Contact Us for Legal Assistance

To ensure your NDAs and other workplace policies comply with California law, contact our skilled business litigation attorneys at SAC Attorneys LLP, today for a consultation.