An Employee Confidentiality and Assignment Agreement (sometimes called an ECA or an Employee NDA) outlines the terms for the employee’s non-competition and non-solicitation restrictions and documents the new employee’s prior inventions and patents (if applicable). By signing the ECA, the employee is agreeing to assign any future inventions related to their work for the company, or as performed using company property, to the company. Further, they agree to hold all company-related information not made available to the public in confidence and agree not to disclose the information to anyone outside of the company.
This agreement can go by many names. In addition to Employee Confidentiality and Assignment Agreement (ECA), you might hear it referred to as an IP Assignment Agreement, Employee NDA, or Employment Contract.
The Employee Confidentiality and Assignment Agreement typically includes the following elements (unless of course, you choose to exclude some of these terms from your agreement):
- IP Assignment – assigns any future inventions related to the signer’s work, and usually any work performed using company property, to the company.
- Non-Disclosure – prevents the disclosure of company information covered under the NDA.
- Non-Competition Restriction – prevents the employee from starting a competing business or working for a competitor for a certain period of time and within a certain geographic area.
- Non-Solicitation Restriction – prohibits the employee from calling on the company's clients, employees and/or vendors to lure them away from your business for a specified period of time once their employment ends.
What if we don't have an agreement with an employee?
The company should have an employment agreement with every employee in the company, including founders. Employee Confidentiality and Assignment Agreements can provide clarity for both the company and the employee, can preempt disputes, and can be carefully examined in any due diligence process. Securing your company's IP is arguably one of the most important aspects of running your company. If an employee hasn’t assigned their IP to your company and leaves, this may raise questions about the IP’s legal ownership in the future. If you’re unsure if an agreement like this is necessary for you, you should discuss it with your legal counsel.
The platform now offers advanced HR capabilities for growing teams called HR Plus. We can automatically link employment offers to equity management, make sure employment documents and IP assignments are complete and ready for diligence, and manage exercise windows and equity repurchase at separation time. With HR Plus, you can extend your platform SaaS subscription with a suite of features that make onboarding and managing employees even easier. If you would like to see a demo of HR Plus or have it enabled, please speak with your account manager.
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