What Happens If You Break a Non-Disclosure Agreement?

A non-disclosure agreement (NDA) is a legally binding contract that limits what you can share about a company’s confidential information. Many employees sign NDAs during onboarding, when working with sensitive projects, or as part of a separation agreement.

If you break an NDA, the consequences can be serious. Depending on the terms of the agreement and what was disclosed, you could face legal action, financial penalties, or demands to stop further disclosures immediately. In some situations, an alleged NDA violation may also impact your current job, future employment opportunities, or professional reputation.

Consequences of Breaking an NDA

If you break a non-disclosure agreement, your employer can take several actions against you.

• Cease and desist letter: Your employer will likely send a letter demanding that you stop the alleged violation and threatening legal action.
• Injunction: Your employer can ask a court to order you to stop disclosing information, return company documents, or even stop working for a competitor.
• Lawsuit for damages: You may be sued for lost profits, costs to develop new information, damage to business relationships, and attorney fees if the NDA includes a fee-shifting provision.
• Criminal charges: In extreme cases involving deliberate theft of trade secrets for commercial benefit, you could face criminal prosecution under California Penal Code Section 499c.
• Your current employer sued: If your former employer believes you brought confidential information to your new job, they may sue your current employer for trade secret misappropriation under California’s Uniform Trade Secrets Act.

What Information Does an NDA Actually Protect?

Not everything your employer claims is confidential actually qualifies for protection under California law.

NDAs can legitimately protect:

• Trade secrets and proprietary information
• Customer lists and client relationships
• Business strategies and financial data
• Product development and research
• Marketing plans and pricing strategies

NDAs cannot protect:

• General business knowledge and industry experience
• Publicly available information
• Skills you developed during employment
• Information about illegal conduct, harassment, or discrimination
• Wage and hour information

California’s Uniform Trade Secrets Act defines trade secrets as information that derives independent economic value from not being generally known and is subject to reasonable efforts to maintain secrecy.

Your employer cannot use an NDA to claim ownership over your general professional expertise.

California Law Limits How Employers Use NDAs

California provides strong employee protections that restrict how employers can use NDAs.

NDAs Cannot Silence Harassment or Discrimination

California Labor Code Section 1001 prohibits employers from using NDAs to prevent you from disclosing:

• Sexual harassment or assault
• Workplace discrimination based on protected characteristics
• Retaliation for reporting illegal conduct
• Wage and hour violations

Any NDA provision attempting to restrict these disclosures is void and unenforceable.

NDAs Cannot Function as Non-Compete Agreements

California Business and Professions Code Section 16600 makes non-compete agreements generally unenforceable.

Employers sometimes disguise non-competes as NDAs by making confidentiality restrictions so broad that you effectively cannot work in your field.

If your NDA prevents you from using general skills, knowledge, or industry experience at a new employer, it may be unlawful.

How Employers Prove You Broke an NDA

Your employer must meet specific legal requirements to prove you violated an NDA.

Employer Must Show the NDA Is Valid

The NDA must be a legally enforceable contract. Your employer must prove:

• You signed the agreement voluntarily
• You received something of value in exchange (consideration)
• The terms are clear and specific
• The restrictions are reasonable in scope

If you signed the NDA as a condition of continued employment in California, courts scrutinize whether adequate consideration was provided beyond your continued employment.

Employer Must Prove the Information Qualifies for Protection

Your employer must demonstrate that the information you allegedly disclosed meets legal standards for confidentiality or trade secret protection under California’s Uniform Trade Secrets Act.

This requires showing:

• The information was not generally known or readily available
• The information provided economic value from being secret
• The employer took reasonable steps to maintain secrecy
• You had access to the information through your employment

Employer Must Show Actual Disclosure Occurred

Your employer must prove you actually disclosed protected information to unauthorized parties. Vague accusations are insufficient.

The employer needs evidence showing:

• What specific information you disclosed
• When and how you disclosed it
• To whom you disclosed it
• That the disclosure was unauthorized

Employer Must Demonstrate Harm

To recover damages, your employer must prove the breach caused actual financial harm. General claims of competitive disadvantage are insufficient without evidence of concrete losses.

Defenses If Your Employer Claims You Broke an NDA

Not every alleged NDA violation is legitimate. You may have strong defenses.

The NDA Is Overly Broad or Unenforceable

Your NDA may be unenforceable if it:

• Functions as a disguised non-compete agreement
• Covers general industry knowledge or skills
• Attempts to silence complaints about illegal conduct
• Violates public policy or employee rights

The Information Is Not Actually Confidential

You have a defense if:

• The information is publicly available
• You obtained it through independent sources
• The employer failed to maintain secrecy
• The information is general knowledge in your industry

You Disclosed Information for a Protected Purpose

California law protects disclosures made for:

• Reporting illegal conduct to government agencies
• Cooperating with law enforcement
• Testifying in legal proceedings
• Discussing wages with coworkers under the National Labor Relations Act
• Reporting harassment or discrimination

Your Employer Is Retaliating Against You

If your employer threatened NDA litigation after you reported illegal conduct or filed a discrimination complaint, the claim may be unlawful retaliation.

What to Do If Your Employer Claims You Violated an NDA?

Take these steps immediately if you receive an NDA breach accusation.

• Do not respond directly: Statements you make can be used against you. Direct all communications through an attorney.
• Preserve documents: Gather your employment agreement, the NDA, any documents you took, communications about confidential information, and evidence that the information was not confidential.
• Consult an attorney immediately: An employment attorney can review your NDA’s enforceability, evaluate whether you violated it, identify defenses, assess retaliation claims, and negotiate or litigate on your behalf.
• Notify your current employer: If employed, inform your current employer about potential litigation that could affect your position and their business.

Early legal intervention often resolves NDA disputes before expensive litigation.

Facing an NDA Violation Claim? Get Legal Help

Facing allegations that you violated an NDA can threaten your career and finances. When your employer claims you broke a non-disclosure agreement, you need experienced legal representation to protect your rights.

At TONG LAW, we represent California employees in NDA disputes. We evaluate whether NDAs are enforceable under California law, defend employees against unjustified breach claims, and pursue retaliation claims when employers misuse NDAs.

If you received a cease and desist letter or believe your employer is retaliating against you through an NDA claim, contact TONG LAW today.

We represent employees throughout Oakland, Sacramento, and across California.