NDAs and Whistleblowing: Where’s the Line?

Depending on your company and your position within it, you might have been asked to sign a non-disclosure agreement, or NDA. A non-disclosure agreement prohibits employees from disclosing certain secret information, like recipes and details of projects that have not yet been released to the public. An NDA can be fairly broad in its scope.

An NDA cannot prohibit an employee from exercising his or her rights, such as the right to speak up about discrimination occurring in the workplace or the right to file a qui tam lawsuit if he or she has good reason to suspect the company is committing legal or ethical violations.

Whistleblowers have the Right to Report without Fear of Retaliation

As an employee, you always have the right to act as a whistleblower. There is a hard line between non-disclosure agreements and your right to alert authorities, whether they are the company’s upper level management, industry regulators, local law enforcement, or federal agencies like the Occupational Safety and Health Administration (OSHA) or the Equal Employment Opportunity Commission (EEOC).

An NDA can limit how an employee reports violations, though. In some cases, they are used to create complex chains of approval for reporting violations and in others, they have been used to prohibit employees from benefiting financially from whistleblowing. This latter case is a clear violation of the False Claims Act, which allows whistleblowers to receive a portion of the penalties violating companies are required to pay after being found guilty of fraud.

Using Confidential Documents to Report Violations

Sometimes, reporting violations require an employee to provide confidential internal documents to authorities. Although this is a violation of the employee’s NDA, there are cases where it is necessary and thus, permissible by law.

The United States Court of Appeals for the Sixth Circuit developed a six-factor test to determine whether disclosing an employer’s confidential information for the sake of reporting violations is a violation of his or her NDA. These factors are:

• How the employee obtained the documents;
• Who was given the documents;
• The content of the documents;
• The reason why the documents were used to report an alleged violation;
• The scope of the employee’s NDA; and
• Whether the employee could have made his or her report without exposing the confidential information in the documents.

Work with an Experienced New York and New Jersey Employment Lawyer

Well-crafted NDAs are useful ways companies can protect their trade and operational secrets. Using them to conceal legal and ethical violations is illegal and unethical in itself. If you suspect wrongdoing on the part of your employer, you have the right to act as a whistleblower and notify the appropriate authorities. Work with an experienced New Jersey whistleblower attorney to ensure that your rights are protected at all times. Contact our team at Sattiraju & Tharney, LLP today to set up your initial consultation with our firm, one of New York and New Jersey’s premier employment law firms.