When it comes to confidentiality agreements, you should keep these three points in mind: however, if you decide to become a whistleblower, it is possible that some information that is normally covered by an NOA will have to be disclosed. In the past, companies have attempted to end whistleblowing actions by citing the whistleblower`s confidentiality agreement. So why? Why is it so important? The answer is that the question of ultimate legality or applicability is not really the key question. The central question is: what is the objective of companies and are the agreements achieving this objective? So the question is, for you, if you`re thinking of blowing the whistle, but you have one of these confidentiality agreements, or maybe you leave the company on your terms or unintentionally, and they ask you to sign one, what do you do? When a Qui tam False Claims Act (FCA) is sealed, companies can discover the Identity of the Relateer, which is a problem for them if they sign a confidentiality agreement or NOA. It`s not just government employees. There are laws that protect the right of individuals to report fraud to the government. We see it as a very high public policy that we want people to be able to report fraud. As a result, courts will generally be considered invalid clauses in employment contracts or severance agreements that limit a worker`s ability to report fraud to the government. Sean McKessy, head of the SEC`s whistleblower office, warned companies against possible sanctions because of banned labor contracts. Similarly, the lawyers who design them may be conditional on the exercise before the Commission. In April 2015, the U.S. Securities and Exchange Commission (SEC) sanctioned the arms company KBR, which required its staff to sign restrictive confidentiality agreements preventing employees from reporting fraud and misconduct to the appropriate supervisory authorities. Triggered by a complaint by former KBR employee Harry Barko, the SEC conducted an investigation into KBR`s NDA practice, culminating in the payment of a $130,000 fine by KBR and ended the practice.
The Securities and Exchange Commission has adopted a rule prohibiting agreements prohibiting the disclosure of data by a staff member to the Agency. SEC Rule 21F-17 prohibits taking steps to enforce or participate in the application of a confidentiality agreement to prevent a person from discussing with the Commission a possible violation of securities law. The only exception is an agreement to protect the information covered by the privilege of the client lawyer. The Securities and Exchange Commission criticized the company for including provisions in severance or employment contracts that limit an employee`s ability to report fraud to the government. And what`s important is that the SEC imposed fines on the companies, even though the SEC acknowledged that the company had never really attempted to enforce those agreements. In 2017, the Federal Acquisition Regulation (FAR), the primary regulation used by agencies to purchase supplies and services from allocated funds, was amended to “prohibit the use of funds used for the use of funds or otherwise made available for a contract with a company that requires employees or subcontractors to sign an internal confidentiality agreement that prevents such employees or subcontractors from reporting waste legally. Fraud or abuse” to the relevant regulator.