Confidentiality agreements are commonly used by companies to protect their intellectual property and trade secrets. Employees are required to review and sign these documents if they are to continue working for their employers. Breaching these contracts could bring about serious legal woes as well as loss of employment. Understanding the consequences of such actions is important for anyone considering violating their contracts.
Loss of Employment
A company whose confidentiality agreement has been breached will confront the guilty employee. If the breach cannot be explained to the employer's satisfaction, the employee will likely be fired. Most confidentiality agreements clearly express the company's right and intent to fire an employee in breach of his agreement.
Difficulty Finding New Employment
It is not uncommon for companies to share information about costly potential employees with their peers, clients and business partners. Someone who has been accused of breaching a confidentiality agreement may find it difficult to secure employment in the same industry. The potential long-term financial loss for the individual could be substantial.
Companies who feel the confidentiality breach has cost them financially (directly or indirectly) will typically file a lawsuit against the guilty employee. The first legal step on the company's part will be to file an injunction to prevent any further sensitive information from being shared. It is up to the company to demonstrate convincingly the damage incurred by the breach of contract. If the lawsuit is successful, damages could range from just a few thousand to millions of dollars.