Are perpetual confidentiality clauses enforceable for remote employees in New Hampshire?

Are perpetual confidentiality clauses enforceable for remote employees in New Hampshire?

In New Hampshire, perpetual confidentiality clauses are generally unenforceable. New Hampshire courts apply a strict 'reasonableness' test to all restrictive covenants. A clause that lacks a defined expiration date is typically viewed as an unreasonable restraint on trade, as it fails to balance the employer's protectable interest against the employee's right to earn a living.

The Legal Standard for Reasonableness in New Hampshire

New Hampshire law does not have a specific statute governing the exact duration of confidentiality agreements. Instead, it relies on common law principles established through judicial precedent. For a confidentiality agreement to be enforceable, it must meet three core criteria:

• Legitimate Business Interest: The employer must prove the information being protected is a trade secret or proprietary data that provides a competitive advantage.
• Reasonable Duration: The restriction must be limited to a timeframe that allows the employer to protect its interest without permanently barring the employee from using their general skills.
• Reasonable Scope: The restriction must be narrowly tailored to the specific information the employee had access to, rather than a blanket ban on all knowledge acquired during employment.

Key takeaway: If your contract uses the word 'perpetual' or 'forever,' it is a red flag. New Hampshire courts are highly likely to view this as an overreach that invalidates the entire provision.

Why Remote Work Changes the Analysis

Remote employment adds a layer of complexity to contract enforcement. Because the employee is not physically present in a New Hampshire office, the 'geographic' scope of the agreement becomes harder to define. However, New Hampshire courts focus on where the harm occurs. If a remote employee leaks proprietary data, the location of the employee is secondary to the location of the business interest being harmed.

Action Item: Review your remote employee contracts to ensure they define 'Confidential Information' specifically, rather than using broad, catch-all language that covers everything the employee learned on the job.

The Doctrine of Blue-Penciling

New Hampshire courts utilize the 'blue-pencil' doctrine. This means that if a judge finds a perpetual clause unreasonable, they may choose to rewrite or 'prune' the clause to make it reasonable rather than voiding it entirely. However, relying on a judge to fix your contract is a dangerous legal strategy.

1. Audit: Identify all existing contracts containing 'perpetual' or 'indefinite' language.
2. Draft: Replace indefinite terms with specific timeframes (e.g., 'two years post-termination').
3. Define: Clearly list what constitutes a trade secret to avoid ambiguity.
4. Execute: Have employees sign updated agreements that reflect current standards.

Key takeaway: Do not rely on a court to 'blue-pencil' your contract. A poorly drafted agreement can lead to expensive litigation and the potential loss of trade secret protection entirely.

Best Practices for Drafting Enforceable Agreements

To maximize the likelihood of enforcement in New Hampshire, focus on precision. Avoid boilerplate language found in generic templates. Instead, tailor the agreement to the specific role of the remote employee.

• Define the 'Why': Explicitly state the business interest being protected (e.g., source code, client lists, proprietary algorithms).
• Set a Sunset Clause: Most courts find 1–3 years to be a reasonable duration for confidentiality, depending on the industry's pace of innovation.
• Include a Severability Clause: Ensure that if one part of the contract is found unenforceable, the rest of the agreement remains intact.

Action Item: Audit your current template library. If you are using a standard 'one-size-fits-all' contract, you are likely exposing your company to unnecessary risk in the New Hampshire jurisdiction.

TermScore can automatically analyze your entire contract repository to identify perpetual clauses and other high-risk language, providing you with actionable insights to bring your agreements into compliance with New Hampshire law before a dispute ever arises.