Agencies Warn Employers on NDAs that Discourage Antitrust Misconduct Reporting

Employers and employees enter into confidentiality agreements to achieve a number of valid ends in the workplace, including safeguarding proprietary information from disclosure to third party competitors.  

Today, two federal regulators, the Justice Department’s Antitrust Division (the “Antitrust Division”) and the Department of Labor’s Occupational Safety and Health Administration (collectively, the “Issuing Agencies”) provided guidance to employers in relation to what workplace NDAs should not restrict.  

Corporate confidentiality agreements, for example, are not allowed to “deter individuals from reporting antitrust crimes.”

Under the Criminal Antitrust Anti-Retaliation Act of 2019 (“CAARA”), a federal law, employers may not discharge or retaliate “against a worker for (1) reporting potential criminal antitrust violations and related crimes to their employer or the federal government or (2) assisting a federal government investigation or proceeding.”

Workplaces that employ NDAs not compliant with CAARA, the Issuing Agencies advised, face a number of potentially adverse outcomes:

• such employers may be adversely affected in connection with “charging decisions and sentencing recommendations” if they are prosecuted by the Antitrust Division;
• such employers may face exposure for separate federal criminal violations;
• such employers may also jeopardize their ability to satisfy their obligations under the Antitrust Division’s leniency policy, which “requires an applicant to ‘use its best efforts to secure the timely, truthful, continuing, and complete cooperation of all current and former employees;’” and 
• such employer’s anti-retaliation policies and training may be considered by the Antitrust Division in assessing the effectiveness of its compliance programming.

The Issuing Agencies rely on “[m]embers of the public . . . to detect and blow the whistle on antitrust crimes. Leads from the public about potentially illegal conduct enable the Antitrust Division and its law enforcement partners to uncover antitrust cartels and monopolization schemes, prosecute those crimes and protect competition.”

Accordingly, “[i]ndividuals who seek to report antitrust violations must not be deterred or prevented [by a confidentiality agreement or otherwise] from coming forward for fear of adverse employment consequences.”

When formulating workplace NDAs, employers should avoid NDAs that:

•  deter individuals from providing law enforcers with relevant information on wrongdoing; and
• are worded so broadly as to suggest that parties bound thereto who report potential crimes or cooperate with law enforcement could face lawsuits and adverse employment consequences as severe as termination (“this fear of retribution leads to less reporting of illegal activity and less vigorous antitrust enforcement”).

In short, employers should not, via their NDAs, “discourage individuals from reporting wrongdoing or cooperating with an antitrust investigation.”

Workplaces should avoid using NDAs whose provisions imply that employees are prohibited from reporting illegal conduct or assisting with an investigation or proceeding; such clauses clash with the basic principles behind CAARA that encourage self-reporting and disclosure of wrongdoing to the government.

Do your workplace confidentiality agreements need to be reviewed from an antitrust compliance perspective? Are you concerned your NDAs contain vague provisions prohibited by CAARA? If so, please reach out to Castle Garden Law for an introductory consultation to cover your confidentiality agreement-related issues.