Can Whistleblowers Break NDAs?

Whistleblowers play a crucial role in exposing corporate misconduct, fraud, and other illegal activities. However, many potential whistleblowers are bound by non-disclosure agreements (NDAs) that may deter them from coming forward. Understanding whether whistleblowers can break NDAs is essential for anyone considering reporting wrongdoing. This guide provides an overview of the legal protections for whistleblowers and the limitations of NDAs in these contexts.

What is an NDA?

A non-disclosure agreement (NDA) is a legal contract between two or more parties that outlines confidential information the parties wish to share with one another for certain purposes but wish to restrict from wider use or dissemination. NDAs are commonly used in business relationships to protect sensitive information such as trade secrets, business plans, and proprietary data.

Legal Protections for Whistleblowers

Federal and state laws provide significant protections for whistleblowers, even if they have signed NDAs. Here are some key protections:

Federal Protections

1. Dodd-Frank Wall Street Reform and Consumer Protection Act:

   • The Dodd-Frank Act includes provisions that protect whistleblowers who report violations of securities laws. The Securities and Exchange Commission (SEC) enforces these protections and provides financial incentives for whistleblowers.

2. Sarbanes-Oxley Act (SOX):

   • SOX protects employees of publicly traded companies who report fraud or violations of SEC regulations. The act includes provisions that nullify the effect of NDAs when they conflict with whistleblower protections.

3. False Claims Act (FCA):

   • The FCA allows individuals to file lawsuits on behalf of the government against entities committing fraud against federal programs. Whistleblowers are protected from retaliation, and NDAs cannot prevent them from reporting fraud.

California State Protections

1. California Whistleblower Protection Act:

   • This act protects employees of state and local governments who report waste, fraud, abuse, or violations of law. The act overrides NDAs that attempt to silence whistleblowers.

2. California Labor Code Section 1102.5:

   • This law prohibits employers from retaliating against employees who report violations of state or federal statutes, rules, or regulations. It also provides protections against NDAs that interfere with whistleblowing activities.

Limitations of NDAs in Whistleblowing

NDAs cannot be used to prevent individuals from reporting illegal activities or cooperating with government investigations. Here are some important points to consider:

1. Public Policy Exception:

   • Courts generally uphold the public policy exception to NDAs, meaning that NDAs cannot prevent someone from reporting crimes or regulatory violations to authorities. Public policy strongly favors allowing individuals to report wrongdoing without fear of legal repercussions.

2. Regulatory Agency Protections:

   • Regulatory agencies such as the SEC and Occupational Safety and Health Administration (OSHA) encourage whistleblowing and provide explicit protections that override NDAs. These agencies often have mechanisms for anonymous reporting, further protecting whistleblowers.

3. Government Investigations:

   • NDAs do not prevent individuals from participating in government investigations or providing evidence to regulatory bodies. Employees are free to cooperate with investigations without fear of breaching NDAs.

Steps to Take if You Are a Whistleblower Bound by an NDA

If you are bound by an NDA but are aware of illegal activities, consider the following steps:

1. Consult an Attorney:

   • Speak with an experienced whistleblower attorney who can provide guidance on your rights and the protections available to you. An attorney can help you navigate the complexities of NDAs and whistleblower laws.

2. Report to Authorities:

   • File a report with the appropriate regulatory agency. Agencies such as the SEC, OSHA, and the Department of Justice (DOJ) have processes for handling whistleblower complaints and can offer protections.

3. Document Everything:

   • Keep detailed records of the illegal activities you are reporting, including dates, times, individuals involved, and any supporting evidence. Documentation is crucial for substantiating your claims.

4. Maintain Confidentiality:

   • While reporting to authorities, maintain confidentiality to the extent possible to protect yourself from retaliation and to ensure the integrity of any ongoing investigations.

NDAs cannot legally prevent whistleblowers from reporting illegal activities or cooperating with government investigations. Federal and state laws provide robust protections for whistleblowers, ensuring they can expose wrongdoing without fear of legal repercussions. If you are considering blowing the whistle, consult with an experienced attorney to understand your rights and protections fully.

If you need help with a whistleblower claim or have questions about your rights under an NDA, contact FairWork Legal Group. Our experienced attorneys are dedicated to protecting whistleblowers and ensuring justice in the workplace.