Can a contract legally cover something that happened before its signing?
When we hired a new employee we forgot to make him sign an NDA. Now, a year into his employment, we want to make sure that he signs one. My question is, what language should I use in the contract to cover not just from the signing date but from a date a year ago? Also, do you guys foresee any legal issues in the future?
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How are you going to hold him to an agreement for a time period he was not under NDA? That seems impossible to enforce. Are you going to make his continued employment subject to him signing the NDA? – Tim J 13 years ago
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assume he hasn't disclosed anything. How can we fix this? We want to make sure that he doesn't disclose anything he learned from the business in the past year, this should be reasonable right? Yes, his continued employment is subject to him signing the NDA. – Sam 13 years ago
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You can't fix it. You screwed up. It is not his fault and if you are trying to cover up your mistake possibly with a vendor or partner who require you to have NDAs in place then you can't just pretend it was signed when it wasn't. If I were him I would not take too kindly to that or a new condition of my employment. I understand your position - but take responsibility - don't try to cover it up. By the way - I don't know how enforceable it is anymore since if anything happened how would you prove when he violated it since he was not always under NDA? Tread lightly here. Your mistake. – Tim J 13 years ago
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I guess 'back dating' is not the correct term here. I don't need to cover anything up. I just want to make sure he doesn't disclose anything he learned while working for the business for now on. that's all... – Sam 13 years ago
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@Sam: I changed the title of your question. I don't think the term "back dated" properly reflects what you're asking. As @Tim pointed out, back dating implies that you basically want everyone to pretend that the contract was actually signed some time in the past. So instead of the contract reflecting today's date, for example, it would show itself as being signed one year ago. I don't think that's what you're asking. I think you want the contract to reflect the actual date that it was signed, but you want it to include wording that states it also applies prior to it being signed. – Zuly Gonzalez 13 years ago
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(Cont.) I have no clue if that's legal, but I _think_ that's what you are asking. If I misunderstood your question, you can rollback my changes. – Zuly Gonzalez 13 years ago
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@zuly That's exactly what I'm asking. Thank you – Sam 13 years ago
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I would make it two separate documents. An NDA that covers from now forward, and a document that he signs that states he has not, in the intervening period, disclosed anything. – Tim J 13 years ago
6 Answers
All you can do at this point is prevent disclosures in the future. So your goal needs to be to get them to sign an NDA asap, rather than raising questions in their mind.
If I were you, I'd approach the employee in a friendly manner and honestly explain that I forgot to have them sign an NDA, but I need them to sign one now. Then I'd hand them a standard NDA that:
- Is effective immediately, not back-dated
- Defines the kinds of confidential material it covers in a normal way
- Doesn't mention anything about when the employee got the information
- Doesn't have anything else that might raise an eyebrow, like clauses about things they might have done before they signed the NDA
Most folks will chuckle, review it, and sign. They might want a little while to read it; treat it like it's not a big deal, just like you would an NDA for a regular new employee.
If your employee refuses to sign, or has already disclosed the information... you have a big problem. If the employee has your confidential information and isn't covered by an NDA, you certainly don't want to alienate them by getting angry or talking about firing them. So smile and say something politic, then go to a private office and call your business lawyer immediately.
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say the employee signs the NDA today, and a week later he discloses something pertinent to the business that he learned 3 months ago. Would the NDA cover this situation? – Sam 13 years ago
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IANAL, but if your agreement specifies *what* is covered, and doesn't specify *when* they learned the info, I would imagine it would. You should verify that with an attorney if you're worried about it. – Bob Murphy 13 years ago
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@Bob Murphy: How can you have an NDA that does not have a start and an end date, that's just asking for trouble from a court. – Blunders . 13 years ago
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@Bob Murphy: "All you can do at this point is prevent disclosures in the future" -- I don't agree, see my answer for the reasons. – Blunders . 13 years ago
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@blunders: I was merely trying to suggest what things one should be careful of in crafting an NDA for this circumstance, not provide every detail. In my experience, a standard NDA has clauses that say it starts on the date of execution, and ends X years after some triggering event, such as termination of employment. – Bob Murphy 13 years ago
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+1 @Bob Murphy: My reading of your comment starting with "IANAL..." was that you were saying not to worry when the disclosure took place, just have an NDA saying what's unable to be disclosed. The time period causing the issue would not be covered by simple reaching an agreement for disclosures going forward unless that information was part of a IP transfer agreement, not a disclosure agreement. Hoping that the external party would not be able to prove when they acquired the information is just that hoping there's no proof, which is unlikely. Am I misunderstanding something? – Blunders . 13 years ago
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Not covered if they already disclosed any information. That is the whole issue. – Tim J 13 years ago
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@blunders: Tim's right - if the information has already been disclosed, the OP is screwed. Let's assume you tell me something, and I go right out and tell Tim, and then next week you tell me, "Sorry, Bob, I should have had you sign an NDA." Nothing you do at that point is going to help you. I'll probably say, "Sorry, blunders, I already told Tim and I'm not gonna sign." Even if you promise me a ton of gold bullion, I don't have a time machine and can't un-tell Tim. Your secret horse has run off, and anything you do to close the barn door is just a waste of effort. – Bob Murphy 13 years ago
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Practically speaking, NDAs serve three purposes. (1) To reinforce what's secret. (2) To warn people tempted to leak that you can bring the hammer down. (3) To give you a hammer. BUT... as the US government found with Bradley Manning sending all that secret stuff to Wikileaks, if somebody is willing to ignore your hammer, no amount of fancy paperwork is going to stop them. That's why I'm in favor of keeping it all simple and friendly. Draconian contracts or strange terms will insult the morally-inclined, might give bad ideas to the less moral, and won't stop people who are determined to leak. – Bob Murphy 13 years ago
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@Tim: It's unknown if any information was disclosed, and if prove exist that information was gain outside the term of the contract, a new NDA would not stop it use. Only way in my opinion to get it back is to purchase make an exclusive transfer of the IP back to the company. If it's been given to someone else, there's nothing to do except limit the liability, which should be done; meaning attempt to get the employee to transfer the IP back to the company. – Blunders . 13 years ago
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@Bob Murphy: Your position is the non-disclosure agreement would cover past disclosures to the employee, even though they were made before the start of the new NDA. I disagree. – Blunders . 13 years ago
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@Bob Murphy: Bradley Manning case while related to the topic of disclosure, has nothing to do NDAs in my opinion. – Blunders . 13 years ago
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@blunders: Actually, I meant to use Manning to illustrate the fact that any form of warnings or coercion will only deter people so far. Even a gun to the head won't deter someone who's willing to die. That being the case, I try not to go overboard with contracts. If someone is trustworthy, a simple contract or NDA will suffice. If they're not trustworthy, no amount of legal verbiage is going to save the day, so I try to weed those folks out before I get to the point of contracts. But YMMV. – Bob Murphy 13 years ago
I don't see any particular issue with getting a custom contract in place. Look into the concept of warranties: the employee can "promise" that he didn't disclose anything, and will continue not to disclose anything. The whole point of contracts and NDAs is that people agree to expose themselves to severe penalties if they do something (disclosing confidential information).
I would involve a lawyer, this sounds like a fairly simple case that they will take care of for you.
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+1 @Alain Raynaud: Agree, though you can't make them promise something if that's not the case; meaning information was disclosed during the period in question. My answer basically suggestion the same route, though addresses if that's an issue, though possible that would be a conditional planned repositioning of the agreement (unknown to the employee, or their counsel unless...) in response to the employee stating that there had been a disclosure during that gap in coverage, and they were unable to promise that no disclosure had occurred. – Blunders . 13 years ago
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Right, but if there was never an NDA in place he would be penalized for something that wasn't told he shouldn't do. That is not something I agree with. You can't hold someone accountable for something that they were not aware of in advance. – Tim J 13 years ago
I have the feeling what you are really asking about is a Confidential Information and Invention Assignment Agreement. That's the type of agreement that would normally be used with an employee.
A Confidential Information and Invention Assignment agreement prevents disclosure of proprietary information by an employee and ensures that any work products and IP (intellectual property) created during their employment belongs to the company.
It shouldn't be difficult to get this resolved, assuming the employee cooperates, and why wouldn't he but best to consult an attorney.
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I assume the OP might have neglected that as well - if they neglected an NDA. And you are right - an NDA is nothing compared to the assignment of IP/work. the OP should be more concerned with what you bring up than some nebulous and usually unenforceable NDA. – Tim J 13 years ago
Interesting legal problem.
My suggestion would be to have the employee disclose any prior knowledge not covered by the NDA within the agreement. While this would not protect you from the gap in coverage, it would server both as a possible heads up on the employee's take on the situation, and might serve as a reasonable proof for lack of prior knowledge if issues developed in the future; at which point the ball would be in their court to prove that's not the case.
Another option might be to "buy" the information during that period where there was a gap in coverage. In said agreement, state that information is now property of the company, and that they no longer own any rights to disclose that information in the future. I would also require that any discloses of said information during the gap in coverage be listed without liability to the employee, BUT any lack of disclosure might at the discretion of the company be responded to via any legal means it saw fit to regain the value the company believed was being represented within the agreement. Clearly, this was your mistake not their mistake, so if you were advised it was legal to do this, I would not place the value of the agreement at $1.
In no way does this answer form legal advice, and as always, consult a professional. (Am interested in any feedback on the legality and/or value of this positioning though.)
Just to elaborate on my comments - the term "back dating" almost always comes with a negative connotation and many times it is outright fraudulent or illegal.
So, to propose that as a solution to your own mistake seems ill-advised at best. I certainly would never agree to sign anything like that - and likely would outright refuse to sign it at all regardless of the date.
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+1 @Tim: Agree, "back dating" is illegal - and might not only render the agreement in whole void, it might in fact place the company in the hotseat to face civil and/or criminal complaints. What to you make of my spin to "buy" the gap in coverage under the terms that future disclosure of the information no longer a right of the employee; see my answer for additional terms. – Blunders . 13 years ago
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A non-compete is essentially a contract that says an employee won't use skills they learned before they worked for you to help a competitor for a certain time after they worked for you. If an employee won't agree not to disclose information they've learned in the last year, they probably won't agree not to disclose information they learn in the future, and you probably don't want them around. – Richardg 13 years ago
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@richardg: A NDA and non-compete agreements are not the same thing. Moreover, "use skills they learned before they worked for you to help a competitor for a certain time after they worked for you" - is not a legally enforceable NCC. NCC's only apply to using information gained during the term of the agreement; which would not cover before the employee joined the company, or any information gain before the agreement was reached. Some jurisdictions within the US, such as the state of California, invalidate non-compete-clauses for all but equity stakeholders in businesses. – Blunders . 13 years ago
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@richardg - given the circumstances I would be highly suspect of an employer who came to me a year later and asked me to sign an NDA and seems to want to hold me accountable for past actions even though the NDA is not enforceable. It is not that I want to share secrets - it is that I do not trust the people who are drawing the stuff up if they were that sloppy and also got their legal advice from a website. This is not an issue that should be handled by wannabe-lawyers. And blunders is correct - you are confusing two different issues. – Tim J 13 years ago
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+1 for "I do not trust the people who are drawing the stuff up if they were that sloppy and also got their legal advice from a website." I'm wrapping up an awkward business relationship, and one early "canary in the coal mine" the other folks were going to be a headache was that their first-draft contract contained clauses relating to a bank infrastructure project that had nothing to do with my eye-candy OpenGL graphics code - and then when I pointed this out, they said, "Sign anyway, we won't hold you to that." Fat freakin' chance! :-) – Bob Murphy 13 years ago
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As addressed above, you can't make a contract for actions in the past but if no information has leaked (I suspect the tone of the original question would be very different) I don't see anything unreasonable here. I prefer not to work with anyone who defines their relationships by the strictest interpretation of a contract and won't do more than follow an agreement to the letter. I have a client who asked me to sign certain agreements 3 years after we started working together and it's a great relationship. – Richardg 13 years ago
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I agree on "back dating" - I just read the question after it had been edited to remove that implication. – Richardg 13 years ago
All you need to do is provide some consideration ($1, a fee, whatever he will agree to) to enter into an agreement that lays out the facts and provides that all information beginning from the date of his employment with you is subject to confidentiality as stated in the agreement to be signed.
This is really just a simple contract issue - a promise for a promise: You promise to deliver the consideration to him to restrict his legal right in and to the IP you want to protect.
No problem at all telling him his job is on the line if he does not sign it, but that might just turn on light bulbs and put you at more risk.
You may also be able to rely on his employment agreement if one exists. How was confidentiality dealt with there? Does it state that his work product is a "work-for-hire"? Perhaps another clause that could be constructed to deal with this?
The real question here is what type of person are you dealing with? This is a moral question ultimately. I guesss you will find out who you have hired when you address this matter on this issue.
