Confidentiality agreements are growing more common in the workplace these days and are no longer limited to managers or to those who might handle secret information. You might have signed one without even realizing that you did.
It’s common to be given a lot of documents to sign when you are hired or on your first day of work. That’s when it’s likely you’ll receive a confidentiality agreement to sign. You might also be asked to sign one if policies change at your work and you receive a new employee handbook, if you are promoted, or when you leave a company.
What is a Confidentiality Agreement?
A confidentiality agreement, also known as a non-disclosure agreement (NDA) is a contract that legally binds you to treat specific information at the place where you work as proprietary (belonging to the company) and therefore not disclosable to others. Such information can include trade secrets and other sensitive information specific to the operation of the company.
Often you will need written authorization to break such an agreement.
However, when you decide to become a whistleblower, some information that would ordinarily be covered by an NDA might need to be revealed. In the past, companies have tried to shut down whistleblowing actions by invoking the confidentiality agreement that the whistleblower signed.
Indeed, when a qui tam False Claims Act (FCA) suit becomes unsealed, companies can find out the relator’s identity, creating problems for them if they signed a confidentiality agreement or NDA.
What Happens Next?
Generally, if the case is brought under the False Claims Act (FCA), the Department of Justice (DOJ) is reluctant to enforce agreements because the public good involved in reporting fraud and false claims takes precedence. The DOJ does not want to have a “chilling” effect on whistleblowers. However, in some cases, too much information that did not directly relate to false claims was taken from companies. Documents that are taken and revealed need to be “reasonably necessary” to bringing a qui tam whistleblower suit. This restriction on documents also applies to pursuing a retaliation complaint.
Two recent cases illustrate what can happen with confidentiality agreements. The dates indicate the final court action:
- February, 2017: An internal auditor employee-turned-whistleblower sued BofI Federal bank under Sarbanes-Oxley and other whistleblower statutes. The worker claimed that his employment was terminated in retaliation. The bank counterclaimed that the worker had breached his contract as well as committed several other offenses. The court dismissed the counterclaims because the whistleblowing actions were protected. Therefore, the retaliatory actions should not have occurred.
- May, 2016: A certified technician working for LifeWatch Services breached his employee and HIPAA agreements because he discovered violations of Medicare regulations. After a patient died in 2012, the technician filed under the FCA. LifeWatch Services counterclaimed that the technician had violated his agreements. The court decided that the need for confidentiality was outweighed by the need to protect a whistleblower who was reporting false claims. There had been no public disclosure and no real harm done to LifeWatch.
What Are the Three Most Important Points to Remember?
When it comes to confidentiality agreements, keep these three points in mind:
- Such agreements do not override the rights of whistleblowers.
- Taking company documents can be considered a protected whistleblower action depending on the circumstances.
- Any confidential information that is disclosed in the course of pursuing a false claims suit or retaliation complaint needs to be limited to what would be considered reasonably necessary.
A Final Point: SEC Whistleblower Cases Have Different Rules
SEC Rule 21F-17 forbids that any confidentiality agreement ban an employee from disclosing fraud to the agency. The only exception is when an agreement shields material which would be covered by the attorney-client privilege.
Working with whistleblowers tirelessly to shed light on fraudulent practices.
If you think you have the facts needed to bring a whistleblower case, the experienced whistleblower attorneys at the Louthian Law Firm can review your case and help you file the appropriate disclosure statement. Under some circumstances, the government will intervene, or join in your lawsuit.
Your chances of succeeding are greater if your whistleblower claim is substantive, clear, and to the point. Because of this, meeting with a qualified whistleblower attorney can increase your chances of winning. The Louthian Law Firm can help you form your claim so that the government will be more inclined to intervene in your case; government intervention can sometimes increase the chances of recovering reward money. Even if the government decides not to intervene, it could still be a good idea to pursue your case without government involvement. Our strong support system can assist you through every step of the process.
For a free, confidential evaluation of your case, call the Louthian Law Firm today at 1-803-454-1200 or, if you prefer, you can fill out our online contact form.