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Posted on April 16, 2019 | Whistleblower Protection
Many employees in various industries must agree to and sign non-disclosure agreements (NDAs) as a requirement of their work. For example, a pharmaceutical company employee may need to agree not to share trade secrets with competing companies. Employees who work in client-facing businesses may need to sign NDAs agreeing not to discuss client-related matters in certain settings. Most NDAs intend to protect employer assets and property, but only certain types of NDAs hold up in court.
Whistleblowing is the act of reporting an employer for dangerous or illegal activity. For example, if an employee of a food processing plant sees gross violations of Food and Drug Administration (FDA) or Department of Agriculture (DOA) regulations, the employee may report the issue to these agencies in good faith and face no risk of losing his or her job or facing other forms of retaliation. In 2012, Congress unanimously passed the Whistleblower Enhanced Protection Act, ensuring even government employees had the right to report malfeasance and illegal activities.
Many companies and other parties demand NDA signings despite the fact that most courts would not enforce an NDA under most circumstances. The psychology behind NDAs is what is most effective for many companies, employers, and other parties requiring them. An NDA can be effective at preventing a signer from speaking out even if the NDA is unenforceable. Even if an NDA is unenforceable, it still works if it prevents the signer from speaking out about a specific issue.
Ultimately, a party requiring an NDA is essentially hoping the person who signs it will be unwilling to pursue legal action for dismantling an NDA. They usually hope the signer simply resigns him or herself to the belief that the NDA prevents reporting an issue, indirectly threatening the signer with legal action if the signer breaches the NDA.
Anyone who signs an NDA should be aware of all the different clauses, exceptions, and caveats included in the NDA. Some elements of an NDA may be enforceable while others are not. The manner in which a signer violates an NDA can also result in legal trouble.
For example, an employee notices a clear FDA violation at work. Reporting it to the FDA directly would constitute a good faith breach of the employee’s NDA. If the employee instead decided to leak the issue to the media before alerting the FDA in the hopes of gaining personal notoriety, this would not constitute a good faith violation of the NDA. Doing so would likely lead to legal action from the company despite any oversight investigations into the elements of the employee’s report.
If you believe you need to report an issue but doing so would violate a signed NDA, the best thing to do is to consult with a whistleblower attorney about your situation. An attorney will carefully review the NDA against you and determine the state and federal statutes that would apply to your contract. Most NDAs are generally unenforceable; your attorney can break down the specific aspects of an NDA that would not hold up in court and assess your reasons for whistleblowing.
In addition to the generally unenforceable nature of NDAs, protections for whistleblowers exist regardless of contractual obligations. Reporting illegal activity in the workplace, reporting sexual harassment, or participating in official legal proceedings as a witness all qualify as protected actions. An individual who engages in such actions cannot face liability for violating an NDA if he or she reports a reasonable issue in good faith. Many extensive protections also exist for reporting fraud. In the end, it is always best to have an employment law attorney review an NDA before you sign it, and if you feel compelled to violate an existing NDA for a specific reason, an attorney can help determine any possible legal implications you might face.