A non-disclosure agreement in Washington state can protect trade secrets, customer data, financial information, and other genuine business confidences, but it cannot stop a worker from speaking about illegal conduct on the job. Two Washington statutes and a handful of federal rules set hard limits on what these agreements can silence, and NDAs that ignore those limits are void in the covered parts and expose the employer to statutory damages and attorney fees.
What a Washington NDA Cannot Silence
The Silenced No More Act, codified at RCW 49.44.211, is the single most important restriction on NDA drafting in the state. It prohibits an employer from requiring any employee or independent contractor to sign an agreement that prevents them from disclosing conduct they reasonably believe amounts to illegal discrimination, harassment, sexual assault, wage and hour violations, retaliation, or any other conduct that violates a clear mandate of public policy.1Washington State Legislature. Washington Code 49.44.211 – Prohibited Nondisclosure and Nondisparagement Provisions Any NDA clause that tries to suppress those disclosures is void regardless of how it is worded.
The list is deliberately broad. An earlier Washington statute covered only sexual harassment and sexual assault; the legislature repealed it in 2022 and replaced it with the current law, which added discrimination, wage theft, retaliation, and the public-policy catch-all.2Washington State Legislature. Washington Code 49.44.210 – Repealed
Penalties for Trying to Enforce a Void Clause
An employer who tries to enforce a prohibited provision is liable for the greater of $10,000 in statutory damages or the employee’s actual damages, plus reasonable attorney fees and costs to the prevailing employee.3Washington State Legislature. Washington Code 49.44.211 – Nondisclosure of Illegal Acts The fee-shifting piece is the real deterrent: pushing back on a protected disclosure means paying for both sides’ lawyers.
The Law Reaches Back to Older Agreements
RCW 49.44.211 invalidates covered provisions in agreements signed before June 9, 2022, as long as the agreement was signed as a condition of employment or during the course of employment.1Washington State Legislature. Washington Code 49.44.211 – Prohibited Nondisclosure and Nondisparagement Provisions If you signed a broad confidentiality clause years ago covering workplace misconduct, that portion is already void. The retroactive reach does not, however, extend to NDAs that were part of a legal settlement.
The Settlement Exception
Nondisclosure provisions in agreements that settle a legal claim survive the Silenced No More Act.1Washington State Legislature. Washington Code 49.44.211 – Prohibited Nondisclosure and Nondisparagement Provisions The statute also permits enforcement of a clause that specifically limits disclosure of the dollar amount paid. If you are negotiating a separation or settlement package, confidentiality terms in that setting have legal backing that a garden-variety workplace NDA imposed during employment does not.
Federal Rules That Override the NDA
State restrictions are only half the picture. Federal law layers additional carve-outs onto every Washington NDA, and they apply whether the document mentions them or not.
The Defend Trade Secrets Act Notice
Under 18 U.S.C. § 1833(b), any individual who discloses a trade secret to a government official or an attorney solely to report a suspected legal violation is immune from criminal and civil liability under federal and state trade secret law. The same immunity covers disclosures made in a sealed court filing.4Office of the Law Revision Counsel. 18 USC 1833 – Exceptions to Prohibitions
The statute requires every contract or agreement governing trade secrets or confidential information to include notice of this immunity. Employers can put the notice directly in the NDA or cross-reference a separate policy document given to the employee. Skip the notice and the employer forfeits the right to recover exemplary damages or attorney fees in any later trade secret lawsuit against that employee.4Office of the Law Revision Counsel. 18 USC 1833 – Exceptions to Prohibitions For that reason alone, every Washington NDA should carry the language.
SEC Whistleblower Communications
For companies dealing in securities, SEC Rule 21F-17(a) prohibits anyone from impeding an individual’s communication with the SEC about a possible securities law violation, including by enforcing or threatening to enforce a confidentiality agreement.5SEC. Whistleblower Protections The SEC has brought enforcement actions against more than two dozen companies for using NDAs, separation agreements, or internal policies that discouraged employees from contacting the agency. Any NDA that could be read to restrict communications with a federal agency should include an explicit carve-out preserving that right.
Consideration When a Current Employee Signs
An NDA is a contract, and each side has to give something of value. If someone signs at the start of a new job, the job itself supplies the consideration. Asking a current employee to sign a new or expanded NDA is where things get complicated.
Washington’s noncompete statute, RCW 49.62.020, requires independent consideration for any noncompetition covenant entered into after employment begins.6Washington State Legislature. Washington Code 49.62 – Noncompetition Covenants No parallel statute addresses NDAs specifically, but general contract law leads to the same place. The Washington Supreme Court held in Labriola v. Pollard Group, Inc. that continued employment alone does not support a noncompete signed after the employment relationship has started.7FindLaw. Labriola v. Pollard Group Inc
The underlying principle carries over to confidentiality agreements. An employer asking a current worker to sign a new NDA should provide something beyond the promise of continued employment: a bonus, raise, promotion, stock options, or access to information the employee would not otherwise receive. Without that extra benefit, a court can refuse to enforce the agreement for lack of consideration.
What Belongs in an Enforceable Washington NDA
A Washington NDA that will actually hold up needs to be specific enough to put the receiving party on notice of what is confidential, and narrow enough to avoid sweeping in information no court will protect.
Core Elements
- Full legal names of the disclosing and receiving parties, matching official identification or business filings.
- A specific description of the confidential information covered — trade secrets, customer lists, financial projections, product designs, whatever the business actually needs to protect. Language like “all business information” invites a court to narrow or reject the agreement.
- Explicit permitted-disclosure carve-outs preserving the right to report illegal conduct under RCW 49.44.211 and to disclose trade secrets to government officials or attorneys under 18 U.S.C. § 1833(b).
- A defined duration. Two to five years is typical for general business information; trade secret protection can run as long as the information remains secret.
- The receiving party’s obligations, including restrictions on copying, sharing with third parties, and using the information for personal benefit.
- Remedies for breach, which may include injunctive relief, actual damages, or a liquidated damages provision.
Standard Exclusions
Every well-drafted NDA carves out categories that fall outside the confidentiality obligation even when they overlap with sensitive material:
- Information already publicly available, or that becomes public through no fault of the receiving party.
- Information the receiving party already knew through lawful means before signing.
- Information the receiving party independently develops without using or referencing the disclosing party’s material.
- Information received from a third party who had no confidentiality obligation.
These exclusions are not optional boilerplate. Without them, a receiving party can face breach claims for using information they legitimately obtained on their own, and a court is more likely to view the whole agreement as unreasonably broad.
For anything beyond a routine template, work with an attorney familiar with Washington employment law. Drafting or review fees for a standard NDA generally run a few hundred dollars, well under the cost of defending an unenforceable agreement.
Remedies When an NDA Is Breached
When protected information leaks, the disclosing party has a few options. Which one fits depends on how much damage has occurred and how fast the information is spreading.
Injunctive Relief
The most urgent remedy is a court order stopping the breaching party from continuing to use or share the information. To get one, the disclosing party typically has to show irreparable harm, meaning money damages alone will not fix the problem. Many NDAs include a clause stating that any breach constitutes irreparable harm, which helps if a dispute reaches court. Judges are generally receptive to injunctions in trade secret cases because once confidential information spreads, it cannot be recovered.
Money Damages
The disclosing party can sue for actual damages: provable financial losses caused by the breach, such as lost profits, competitive harm, or the cost of mitigating the disclosure. Some NDAs include liquidated damages clauses setting a predetermined amount payable on breach. These are enforceable only if the amount is a reasonable estimate of the probable loss; a court will strike down anything that operates as a penalty.
Proving the Loss
Damages from an NDA breach are often harder to prove than people expect. If a former employee shares a client list with a competitor, the disclosing party has to show what business was actually lost as a result, not just that the information was shared. Narrow, specific agreements pay off here: the more clearly the protected information is identified, the easier it is to trace a breach back to measurable harm.
Tax Cost of Confidentiality in Sexual Harassment Settlements
Federal tax law puts a specific price on silence in one category of settlement. Under Section 162(q) of the Internal Revenue Code, no tax deduction is allowed for any settlement or payment related to sexual harassment or sexual abuse if that payment is subject to a nondisclosure agreement. The prohibition also extends to attorney fees related to the settlement.8Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
The rule applies to employers of every size. The practical effect: an employer can deduct the settlement payment as a business expense, or keep the details confidential, but not both. For a large settlement, losing the deduction can add tens or hundreds of thousands of dollars to the true cost of requiring silence, and that number belongs in the calculation before either side agrees to a confidentiality term.