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Are employee confidentiality or non-disclosure agreements a growing trend?

Based upon a number of industry surveys, safety and privacy rank at the top of reasons why executives join private clubs. Many of the best private clubs require full-time staff to sign confidentially agreements, which are becoming an important element of a condition for employment.

When structuring such an agreement, clubs needs to define what is confidential information, how the club establishes the confidential relationship, and how the club enforces the agreement in order to protect the information, the membership and the club.

A comprehensive non-disclosure agreement includes clear definitions that specify what aspects of the membership is confidential: its makeup, number of members, member names, member preferences and details about member families and their behavior. Certain documents may be listed as confidential, including member applications, financial reports, training manuals and member and employee policies to name a few. A good definition of confidential information also needs to include what is not confidential. It is unreasonable to execute a confidentiality agreement that prevents disclosure in all cases; therefore, rational exclusions help avoid challenging litigation.

Confidential information is a kind of intellectual property and a non-disclosure agreement is a kind of license to use that intellectual property. The club must define a reasonable scope of confidential information and be clear about its application, including realistic exclusions such as the club’s social or sports calendars. A good non-disclosure agreement will reserve injunctive remedies in case of a breach of confidentiality.

How you protect the confidential information is key to proper enforcement of a non-disclosure agreement. Frequent password changes, locking cabinets, and tracking computer usage down to keystroke monitoring may or may not be sufficient. If you cannot prove you secure the confidential information, it will be harder to enforce the non-disclosure agreement.

The confidentiality document should limit who has access to the information—only allow access to deeply confidential information on a need to know basis. Staff should be aware of the gravity of the document and convey a tenor of seriousness among staff as to its implementation to ensure its consistent effectiveness.

Dan Denehy is the President of DENEHY Club Thinking Partners, a leading executive search and management consulting firm serving the private club industry. He serves on the National Club Association Foundation BoardHe can be reached at [email protected].