A gag clause is often used as part of an employment contract as a way for an employer to protect special and/or proprietary corporate information, trade secrets, and confidential employee information. In legal use, a gag clause refers to the situation when individuals are ordered not to speak of certain information.
Use of Gag Clauses
Employment contracts will generally use gag clauses along with non-disclosure agreements. For example, the employee might be under a strict non-disclosure agreement in terms of company business, trade secrets, and terms of employment. However, the employment contract might specify an additional gag clause that pertains to the time after the employee leaves the company or is terminated. An employee might be under a gag clause as it pertains to the general business conditions of their ex-employer or perhaps the confidential information about current employees. Example: I am not able to speak to the conditions of my termination, as I am under a strict gag clause from my past employer.
In a legal sense, gag orders or clauses are permissible under contract or by order of an authority. However, gag clauses that are used as a condition of or as a product of an employment contract may be difficult to enforce, especially in certain states. Employment law is often for the benefit of the employee, and gag clauses are sometimes viewed to violate the free speech of the employee. In general, a gag clause is permissible when an employer can show that the information either has a very clear proprietary ownership or would cause the company irreparable harm in the marketplace. Additionally, the clause must be shown to be very narrowly and tightly drawn.
Gag Clauses for your Employees
Employment law is a complex subject and varies widely from state to state within the United States. Adding to the complexity, many companies have global operations and/or outsource certain business functions to third party firms. When thinking about the protection of your trade secrets and proprietary information, it is important to ascertain the full impact of all types of employees and partners – contractors, employees, part-time employees, supplemental staff, third party agencies, and general contractors. Each employee classification may have additional steps required in order to create an enforceable gag clause, so seeking legal council is a necessary step to drafting any such employment contract.