On April 1, 2015, the Securities and Exchange Commission took administrative action against a company for its use of a confidentiality agreement during internal investigations into potential wrongdoing.

During internal investigations, the company required all witnesses to sign a confidentiality statement that prohibited the witness from discussing the interview and the subject matter of the interview without prior authorization from the legal department.

The SEC determined that the confidentiality statement impedes communication by employees with the SEC regarding potential illegal or unethical conduct and undermines the protections of federal whistleblower laws.

SEC puts employee confidentiality agreements on notice As a result, it issued a cease and desist order to the company, fined the company $130,000, and required the company to contact all employees who signed the confidentiality statement since 2011 to advise them of their rights. The company has also voluntarily amended their confidentiality statement to include a disclaimer that the statement does not prohibit employees from reporting possible violations of law to the appropriate governmental agency.

What it means for employers

It is difficult to predict the potential reach and ramifications of the government’s decision to attack a relatively standard confidentiality agreement, but it could have a far-reaching effect on employer confidentiality provisions.

In addition to federal securities laws, there are many other state and federal employment laws that include protections for whistleblowers who report potential law violations.

The company’s confidentiality statement in this case was not uncommon, as most employers have strict confidentiality provisions in employment agreements, employee policies, and as part of their investigation processes for obvious and legitimate reasons.

At this time, it is unclear whether other governmental agencies, such as the Department of Labor or the Equal Employment Opportunity Commission, will follow the SEC’s lead in attacking broad confidentiality provisions, but employers should be prepared for the possibility and make the necessary adjustments to address it.

What you should do now

Now is the time for all employers to review and update their confidentiality and investigative policies. There are steps employers can take to protect the confidentiality of company information, while still preventing potential violations of whistleblower laws.


G. Joseph Curley and Joseph G. Santoro lead Gunster’s labor & employment law practice, which has the multidimensional talent and diplomacy needed to advise on preventive counseling and proactive human resource practices, single-plaintiff and class-action employment litigation, trial and appellate matters, as well as alternative dispute resolution strategies.

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