NDAs have been around since the 1940s, first used to protect trade secrets in the tech and maritime industries. Today, they’re common in most workplaces, sometimes to a fault.
According to research from nonprofit Lift Our Voices and Penn State University, 45% of workers have signed a nondisclosure agreement, and 39% are bound by mandatory arbitration. Sometimes they protect real secrets. Other times, they silence people.
If you’ve ever asked if you have to sign an NDA or wondered what happens if you refuse to sign an NDA, you’re not alone. Many people aren’t sure where fair protection ends and overreach begins. Keep reading to learn what NDAs cover, when they make sense, and when they cross the line.
What Does Signing an NDA Mean?
Signing a non-disclosure agreement (NDA) means you agree to keep certain information private. You’re entering a legal contract that protects details a business or individual shares with you in confidence. These agreements also go by names like Confidentiality Agreement (CA), Confidential Disclosure Agreement (CDA), or Proprietary Information Agreement (PIA). An NDA can be:
- Unilateral: One party shares information that the other must keep private.
- Mutual: Both sides share and protect each other’s information.
Most NDAs cover trade secrets, pricing, client lists, intellectual property, and marketing plans. They’re common in jobs, partnerships, consulting, research, and investor discussions where sensitive information needs protection.
Once signed, an NDA becomes legally binding. Breaking it can lead to legal or financial penalties. Put simply, signing an NDA means protecting what’s private and proving you can be trusted.
Signing an NDA as an Individual, Not a Company
When an individual signs an NDA, it usually protects a company’s information. In contrast, NDAs between companies are often mutual, since both sides exchange sensitive details.
In most jobs, you don’t have to get extra pay or a bonus for the NDA to be valid. Your job itself counts as the “exchange” (or “consideration“) that makes the agreement legally binding, since you get a salary and benefits for promising to keep certain information private.
Still, some NDAs can be one-sided, so make sure the terms are fair and the definition of “confidential information” isn’t overly broad or restrictive.
Do You Have to Sign an NDA?
You don’t always have to sign an NDA, but many companies include it as part of the hiring or partnership process. It’s technically voluntary, yet turning it down can come with risks. Refusing to sign might mean losing a job offer, contract, or potential business opportunity.
Companies rely on NDAs to protect sensitive details like trade secrets, client lists, or internal strategies. By signing, you show that you understand the importance of privacy and agree to handle their information with care. It’s often the first step in building trust and setting the tone for a professional relationship.
Reasons Not to Sign an NDA
There are times when signing an NDA just isn’t a good idea. Most are written to protect genuine business information, but some go too far and end up silencing or controlling people instead.
One clear warning sign is when an NDA hides unethical or illegal behavior, like harassment or fraud. The #MeToo movement brought this problem to light, showing how some NDAs were used to keep victims quiet and protect those accused of misconduct. Be cautious if an NDA:
- Creates mistrust or limits communication, making open discussion difficult.
- Demands secrecy with no clear end date, leaving you tied to it indefinitely.
- Gives one side all the control, without offering you any protection.
- Restricts future jobs or business opportunities, which some investors try to do.
- Covers information that isn’t truly confidential, making it overly broad.
- Blocks whistleblowing or cooperation with authorities, including whistleblower rewards.
- Includes illegal or unethical terms, like clauses that violate public policy or, in some states, break “sunshine-in-litigation” laws that prevent NDAs from hiding public risks.
- Intimidates employees or creates a “chilling effect”, discouraging people from speaking up.
If the NDA feels more about protecting reputations than real business interests, that’s your cue to pause. Read it carefully, ask questions, and get legal advice before you sign.
NDAs Can't Block Legal Reporting
Before signing, know your rights. NDAs can’t stop you from reporting fraud, misconduct, or any legal violations.
Under SEC Rule 21F-17(a) and the Corporate and Criminal Accountability Act (CAARA), it’s illegal for an NDA to limit contact with the SEC, DOJ, or OSHA. Any clause that tries is unenforceable.
You still have the right to report wrongdoing, even after signing. Big firms like JPMorgan and D.E. Shaw have been fined for using NDAs that crossed the line.
When an NDA Is Worth Signing
You should consider signing an NDA when it clearly protects genuine confidential information and sets fair expectations for both sides. It needs to feel fair and straightforward, not restrictive.
A strong NDA uses plain language and applies to a specific project or business purpose. It explains what information is confidential, how it’s handled, and who can access it. You should also have time to review it, ask questions, and suggest changes before signing. Look for NDAs that:
- Use simple language, not dense legal jargon.
- Limit “confidential information” to what’s relevant to the deal or project.
- Set a clear start and end date to make sure that confidentiality doesn’t last forever.
- Allow time for review and negotiation so you can clarify anything unclear.
- Exclude whistleblower restrictions or coverage of public information.
- Define who can access the information, such as key staff or advisors.
- Explain what happens to shared materials once the agreement ends.
- List the legal jurisdiction for disputes so both sides know where issues will be resolved.
When an NDA meets these standards, it helps build real trust. You know what’s protected, what’s not, and how long the rules apply. Most importantly, you won’t feel boxed in by unclear terms or endless secrecy. You’ll know exactly where the boundaries are. A fair NDA protects both sides without overstepping.
Do both parties need to sign an NDA?
For a one-way NDA, only the receiving party signs, since it protects the disclosing party’s information.For a mutual NDA, both sides sign to confirm they’ll protect each other’s confidential information and understand their legal responsibilities.
Should You Sign an NDA for a Job Interview?
Some employers may ask you to sign an interview non-disclosure agreement before or during a job interview. It’s common in tech, finance, R&D, and marketing roles where you might see confidential information or prototypes.
It’s fine to sign if it only covers what’s shared during the interview and includes a clear time frame. That kind of NDA protects business information without limiting your career. However, be cautious if it:
- Restricts future jobs or where you can work next.
- Claims ownership of your ideas or anything you share.
If it feels too broad, ask to narrow the scope or make it mutual so your own work is covered, too. For example, imagine you’re interviewing with a startup. The interviewer may want to show you a new app concept so they can explain what your potential role could be.
If you sign a one-sided NDA, you’d agree to keep their app idea confidential, but they wouldn’t be required to protect any ideas you share during the interview. By asking for a mutual NDA, you can also protect your own creative work.
How to Tell If You Should Sign an NDA
Not all NDAs are created equal. Some protect real business information, while others go too far and limit your rights. Knowing how to tell the difference helps you make smart decisions before signing. The section below breaks down when an NDA is worth signing, when to ask for edits, and when it’s best to walk away.
| Your Move | When It Applies | What It Means | What to Double-Check Before Signing |
|---|---|---|---|
| Sign | Terms are clear and limited to a specific project or deal. | Protects legitimate confidential or proprietary information under defined limits. | • Confidential Information Clause: Lists what's covered and excluded. • Term Clause: Sets a reasonable duration (usually 1–5 years). • Return or Destruction Clause: Explains how data is handled after the NDA ends. • Access Clause: Identifies who can see or use the shared info. • Governing Law Clause: States where disputes will be resolved. |
| Ask for Edits | Language is vague, broad, or inconsistent, but fixable. | The purpose is fair but needs clearer boundaries. | • Definition Clause:Replace “all information” with specific examples. •Scope Clause:Limit to materials tied to the project. •Exclusions Clause:Add public, prior, or independently developed info. •Mutuality Clause:Make sure both parties share equal responsibility. |
| Walk Away | Terms are one-sided, overly broad, or legally risky. | Could restrict your rights or expose you to liability. | •Ownership Clause: Watch for claims over your own work or materials. •Indemnity / Fees Clause: Avoid penalties that protect only them. •Assignment Clause: Don’t allow transfers without your consent. •Perpetual Confidentiality Clause: Skip NDAs with no end date. |
A fair NDA should protect both sides, set clear terms, and respect your future opportunities. If it doesn’t, it’s worth taking a closer look before you agree.
What Happens if You Refuse to Sign an NDA?
Refusing to sign an NDA can have consequences. You might lose a job offer, contract, or potential partnership if the other side insists on it. Still, walking away can be the right move when the terms are vague, one-sided, or just don’t feel fair. You should refuse to sign an NDA if it is clearly designed to cover up illegal or unlawful activity, such as sexual harassment.
Before saying no, try to talk it through. Ask for clarification or request changes that make the agreement more balanced. Narrowing the scope, adding a clear time limit, or making it mutual can turn a risky NDA into something worth signing, without giving up your rights.
How to Negotiate an NDA
An NDA isn’t always take-it-or-leave-it. With the right approach, you can push for fairer terms before you sign. Start the conversation early, before the offer or deal is finalized. That gives you time to review the terms carefully and discuss any changes without pressure.
Ask why certain clauses are included instead of assuming they’re standard. Keep the tone open and cooperative to make it easier to find common ground. When you suggest changes, frame them as ways to make the agreement fair for both sides, not as objections.
With the right approach, negotiating your NDA can feel less tense and more productive. A few practical steps can help guide the conversation:
- Use examples from your industry to show what’s typical and fair.
- Get every change in writing before you sign.
- Watch for red flags if the other party refuses to make reasonable adjustments.
When you’re ready to suggest edits, keep your requests simple and concise. For example:
- “Can we narrow this to project-related details?”
- “Let’s set confidentiality to two years.”
- “Can we add exclusions for public or prior knowledge?”
Approaching it this way keeps things clear and professional. It also shows you’re open to collaboration and focused on reaching an agreement that protects both sides.
Can You Testify in Court if You Signed an NDA?
You can testify in court even if you’ve signed an NDA. Your legal duty comes first, and an NDA can’t stop you from cooperating with a court or law enforcement. Here’s what that means in practice:
- The court can issue a protective order to keep sensitive details private.
- Whistleblower laws like the Dodd-Frank Act and Sarbanes-Oxley Act protect people who report misconduct.
For example, former lab leaders at Theranos testified in the Elizabeth Holmes trial despite being bound by strict NDAs. Their testimony went forward because the law takes priority over confidentiality. An NDA can’t stop you from speaking when the court requires it, and the legal process helps keep sensitive details protected.
Protection Goes Both Ways
Some secrets, like Coca-Cola’s recipe or KFC’s spice blend, are worth protecting. That’s when NDAs work as intended, keeping valuable information secure. In Celeritas Technologies vs. Rockwell International, the company’s patent was ruled invalid, but its NDA held strong, earning millions for its wireless technology.
Not every NDA works that way. A 2024 study from the Clayman Institute found that NDAs tied to harassment or discrimination often isolate and silence victims. The same secrecy that protects innovation can just as easily hide misconduct.
Before you sign, think about what the NDA is really protecting. The best NDAs protect people as well as ideas.
