#28 | 🚨 OpenAI's illegal NDAs

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🫶 A word from us, to you

Good morning (or evening depending on where you are)!

Today we're coming at you with the 28th issue of Klick Click, and we've got some exciting potential news as we close in on the 30th edition next week. We want to engage you, the reader, and create a community of people invested in not only their own professional growth, but also Klick Click's future.

Anyway, more on that next week. Keep your eyes peeled!

👉 The What and the Why

Chances are that you've at some point signed an NDA while being onboarded with an employer or new client. Most of the time these are just standard practice document stating that you shouldn't share any confidential information about any involved party, sometimes however, this is not the case.

In the case of OpenAI, the terms of the NDAs some of their employees are forced to sign has proven borderline illegal as stated by a recent whistleblower. (source).

What happened

The Washington Post recently received an anonymous letter claiming that OpenAI is violating several SEC laws in their NDAs. Specifically, the letter outlines:

Several outlets have contacted OpenAI's in hopes of a response, after which a spokesperson eventually responded saying their whistleblowing policy stops them for commenting on the matter for employee privacy reasons.

The SEC also made a comment to TechCrunch saying:

So it's fair to say that even the SEC agrees with the claims of malicious NDA practices by OpenAI.

👀 The Implications for You

This story is likely less about whistleblowing itself and more about the practices OpenAI applies with its standard NDA employees sign.

It's not uncommon for NDAs to be relatively restrictive, often too restrictive, but still legal. This often affects what clients a business can work with, what employers a worker can apply to work for and as a result a loss of income.

While a loss of income is bad in itself, it at least doesn't cause any legal concerns.

So to break it down, before signing an NDA, here are couple things to keep in mind:

• Legality: No matter how much you want the work, always ask yourself "Is this legal?". May seem obvious but often times, as shown with OpenAI recently, it is not the case.

• Restrictions: NDAs occasionally restrict how/when you can vest any owned shares in the company you work for. And breaking the NDA might make you lose ownership of these shares.

• Duration: Pay attention to how long the NDA is effective. Some agreements have a time limit, while others can be indefinite. Knowing how long you're bound by the terms can help you make a smarter decision about whether to sign.

Ultimately its always best to check with legal counsel, but you probably already knew that.

🔥 Our take on it

As someone who has experience working with large and small companies alike (me Jonathan, the writer), I've noticed some clear trends in how NDAs shaped. Typically, the larger the company the more restrictive and borderline abuse the contract is.

The question is though – is this because large companies are inherently evil? Probably not. More likely, it's because the larger the company is, the more potential damage a breached NDA can do. Perhaps OpenAI is just trying to protect itself and its interests, but at what cost?

Companies and individuals alike should always strive for a fair balance between protecting their own interests as well the others.

Protecting company assets at the expense of an employee's future possibilities, income, or even legal obligations is not a great look for anyone.

And how does all of this start? Fair and transparent NDAs.

👋 See you on Thursday!

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