Whistleblowers and Confidentiality Agreements

I’m revising the guidance to Koncision’s confidentiality-agreement template to note that being bound by a confidentiality agreement might not preclude an employee from acting as a whistleblower and disclosing information that might otherwise be covered by the confidentiality agreement.

In that regard, consider section 21F-17(a) of the Securities Exchange Act of 1934, which implements the Dodd-Frank Act’s securities whistleblower provisions. It prohibits target entities from enforcing confidentiality agreements to prevent whistleblowers from communicating with the SEC.

And here’s some relevant caselaw:

  • In re JDS Uniphase Corp. Sec. Litig., 238 F.Supp.2d 1127, 1137 (N.D.Cal.2002) (“To the extent that [the confidentiality] agreements preclude former employees from assisting in investigations of wrongdoing that have nothing to do with trade secrets or other confidential business information, they conflict with public policy in favor of allowing even current employees to assist in securities fraud investigations.”).
  • Chambers v. Capital Cities/ABC, 159 F.R.D. 441, 444 (S.D.N.Y.1995) (“it is against public policy for parties to agree not to reveal … facts relating to alleged or potential violations of [federal] law”).

Anything you’d like to add?

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

2 thoughts on “Whistleblowers and Confidentiality Agreements”

  1. When you say guidance, do you mean changing the language of the document? If not, and this is some sort of supplementary information, do you include reference to every potentially-applicable Federal law that could impact an agreement?

    • By “guidance,” I mean the commentary that accompanies the questionnaire. Regarding whistleblowing, I intend simply to alert users to the issue. And because that issue isn’t something you can draft around, it would be counterproductive to turn the guidance into some sort of whistleblowing reference work.


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