Question

What if a company drafts an employment agreement that says that the employee will be in breach of the confidentiality clause if they disclose information to government agencies like the SEC. Will the employee be in breach if they blow the whistle? Are there any protections against such clauses in employment agreements?

Answer 1

SOLUTION

Introduction

Trade secrets and confidential business information are valuable assets of every business venture

Unlike other forms of intellectual property, which can be protected by patents, trademarks, trade dress and copyrights, trade secrets and confidential information derive their economic value from not being generally known to the public or to the competition. This kind of intellectual property, therefore, requires measures to ensure that the information remains secret.

A common form of protection of such information is the implementation, use and enforcement of non-disclosure agreements (NDAs) and confidential information provisions in business agreements. These protections can be found in independent documents, such as NDAs, trade secret agreements, and confidential information agreements, or they can be included in other contracts such as employment agreements, non-compete agreements or severance agreements. Regardless of name or form, non-disclosure covenants basically do the same three things. First, they define the information that the business deems confidential. Second, they bind employees, consultants, vendors, suppliers and other business associates to only use trade secret and confidential information in a manner that advances the interests of the business. Third, they provide the owner of the trade secrets or other confidential information with remedies against a party who violates this confidence.

But if there is provision in an agreement that directly or indirectly restricts an employee or other person from disclosing confidential information to a government law enforcement agency or SEC.

in such a way that discouraging an individual from reporting a violation of law designed to protect the public interest in some way.

Penalties

Any restriction by a business on an employee or other business associate that directly or indirectly prohibits, restricts, or discourages the reporting of a violation of law to a law enforcement agency will be deemed unenforceable and could lead to civil penalties against the business in an enforcement action

Therefore there is No breach of NDA aggrements if employees discloses any shuch information even if such terms are mentioned in NDA.