Non-disclosure agreements (NDAs) are widespread in the business world. They restrict employees from potentially damaging an organization by releasing trade secrets and confidential information or making disparaging remarks about the business to third parties. While, on paper, the goal of NDAs is to protect sensitive information, they can be misused to stifle and scare employees into silence.
Understanding Your NDA (and When It Can Be Broken)
Non-disclosure agreements that restrict your ability to report misconduct to the government are illegal in the U.S.
May 15, 2024
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Summary.
Some NDAs illegally place restrictions on an employee’s ability to report misconduct to government agencies like the U.S. Department of Labor (DOL) or the U.S. Securities and Exchange Commission (SEC). Securities violations, including fraud, insider trading, and market manipulation, are some of the most common forms of misconduct that companies try to prevent employees from reporting. If you ever find yourself in this sticky spot — having signed an NDA that restricts you from blowing the whistle on a securities violation at work — it’s important to know your rights. Most importantly, restrictive NDAs are illegal and you can report misconduct (and an illegal NDA) confidentially to the SEC.