Whistleblowing When There is a Confidentiality Agreement or NDA in Place

Under the False Claims Act (FCA), an employee or other officer of the company can report illegal activity by the company to the government, and can do so safely and with legal protections. In some cases, the whistleblower may even be able to share in whatever financial recovery the government receives as a result of the information the whistleblower shared.

How Whistleblowing Works

Generally, when a whistleblower makes a complaint, the government begins an anonymous and confidential investigation—that is, the whistleblower’s identity will never be revealed during this investigatory phase. But if the government does go forward with the case, the identity of the whistleblower will be revealed.

NDAs and Confidentiality Agreements

The whistleblower is protected from retaliatory action at work by the employer. But what about contractual actions—specifically, when the whistleblower is or was bound by a confidentiality or nondisclosure agreement, and in whistleblowing, the reporter has violated these agreements. Can the whistleblower be sued by the company for breaching these agreements, even though he or she was reporting legitimate, protected information to the government?

There is nothing in the False Claims Act or whistleblower laws themselves, that explicitly says that a whistleblower can’t be sued for breaching confidentiality or nondisclosure agreements. That can expose  whistleblowers to potential civil liability for whistleblowing—and give businesses a big stick or threat to hold over whistleblowers, which usually ends up being a  counterclaim when and if the whistleblowing ends up as a lawsuit.

What do Courts Do?

Courts have been mixed on what to do in these situations.

Many courts just won’t enforce the confidentiality or nondisclosure agreements, finding them to stifle the public policy interest in allowing whistleblowers to report illegal information. Some of these courts also note the public policy issues in punishing people for doing something they have a legal right to do, under the False Claims Act.

But other courts have disagreed, and allowed the counterclaim for breach of the nondisclosure agreement to go forward. These courts note that a contract is a contract, and unless and until the law says otherwise, there is nothing preventing a whistleblowing employee from being sued for breaching a separate contract between the employee and the employer-even if the breach was in connection with otherwise protected whistleblowing activities.

And other courts have taken a more neutral or moderated approach, saying that so long as the whistleblowing employee doesn’t give away more confidential information than what is necessary, and so long as the employee isn’t acting maliciously to just spill all of the employer’s confidential information, then the employee is protected from liability under any kind of contract.

Employees who are considering blowing the whistle on employers, should consult with an attorney first, especially if they are higher level executives who may have signed documents binding them to secrecy or confidentiality.

Do you have a whistleblower case–or need to defend against one? Call the West Palm Beach business law attorneys at Pike & Lustig today for help.

Source:

casetext.com/case/united-states-ex-rel-bahnsen-v-bos-sci-neuromodulation-corp

casetext.com/case/cafasso-v-gen-dynamics-c4-sys-inc