Employment Law Commentary, March 2015

DOES THE GOVERNMENT THINK YOUR CONFIDENTIALITY AGREEMENTS CHILL WHISTLEBLOWING?

By Janie F. Schulman

Introduction

Employers routinely incorporate confidentiality provisions into a variety of agreements, including employment, proprietary information, separation and settlement agreements. In an era when many companies' most valuable asset is intangible knowledge, broad confidentiality provisions have become as standard in the workplace as the morning coffee break. Now, however, where employers see a tool to protect their intellectual property, the Securities and Exchange Commission (SEC) and other regulators see a nefarious device designed to chill whistleblowing. On April 1, 2015, the SEC announced a $130,000 settlement with Kellogg Brown & Root, known as KBR, which resulted from the SEC's first enforcement action for allegedly using improperly restrictive language in confidentiality agreements with the potential to stifle the whistleblowing process.¹