Mandated Exceptions to Confidentiality Provisions in Employee Agreements; The Government’s Campaign to Promote the Snitch

Employers often insist that their employees sign written agreements promising not to disclose confidential information concerning their employer to anyone during and following their employment.  Of course such agreements frustrate governmental agencies which want to encourage employees to complain to them.

Thus, federal agencies are now invalidating and refusing to recognize employee confidentiality agreements which do not explicitly acknowledge and alert the employee of their right to file a charge or complaint against the employer with government agencies.  In fact, it appears impermissible to contractually require an employee whose severance agreement contains a confidentiality provision to return whatever amounts they received in payment on termination if they breach their confidentiality agreement and collect a reward for complaining about their former employer’s business practices.

The Department of Labor new Policy Guidance states the extent to which OSHA will not approve of such provisions.  The SEC recently settled a cease and desist action against an employer for the use of what it claimed was an impermissibly broad confidentiality provision.  The SEC Cease and Desist Order imposed a $265,000.00 fine and remedial sanctions, including a specific contractual provision to be used by the employer in each employee confidentiality agreement.

The specific contractual language in the SEC Order should be used in all employee agreements which contain confidentiality provisions.

© 2/9/2017 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

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