Why Did The Lawyer Put This In My Contract?: Confidentiality

This will continue my attempt to explain some of the legal mumbo jumbo in your employment contract, and why the lawyers put it there. Today, I'll talk about confidentiality. You may see a sentence or two in your agreement that look something like this:

I promise that I will keep all matters relating to this Agreement confidential and that I will not discuss, disclose or provide information concerning any term of this Agreement to any person or entity, except to my spouse, my attorney, my accountant or tax advisor, the Internal Revenue Service, or pursuant to a subpoena.

This is fairly typical one-sided confidentiality language that your employer's attorneys like to stick into most agreements.

Here's why your employer's lawyer put the confidentiality clause in the agreement: 

It's very simple. They don't want you to tell coworkers about the money you got, or your terms of employment. If they put it in your offer letter or employment agreement, they are trying to keep you from telling colleagues what you make, what benefits you are getting, and whether you have anything cool in the agreement like severance, termination for cause only, or bonuses.

If they put it in your severance agreement, it's because they don't want you to tell your former coworkers that you got severance, how much, if you got any extras like health insurance, and if the company waived your noncompete.

If they put it in your noncompete agreement, they're pretty silly. What's the point of having a noncompete you can't show potential employers? Smart management-side lawyers put in language that you must show the noncompete to potential employers. That way, if you violate it, they can come after the competitor and you. How can they come after a company who can prove you weren't allowed to show it to them and therefore they couldn't have been on notice of it?

Here's what you should ask for:

If your employer wants you to keep the agreement confidential, they should too. Most employers (I'm talking about you, HR departments) leak like sieves. There are no secrets. You'll get blamed for blabbing even if your supervisor or HR is a gossip and can't keep a secret. If the confidentiality provision is mutual, then the company will usually read the Riot Act to anyone who knows about the agreement and threaten them within an inch of their employment if they gossip. I've never had one leak that I know of with a mutual confidentiality clause, but I've seen plenty of leaks with one-sided clauses.

Your employer will tell you that it's in their best interest to keep it confidential, and they have no incentive to tell. True for the company, but not true for a person in the company who likes to play I Have A Secret.

If the provision is in your employment agreement and you aren't in management, your employer might have a problem. The NLRB is taking the position that agreements prohibiting employees from discussing working conditions are a no-no. The National Labor Relations Act, which is what NLRB handles, doesn't cover supervisors, so the company can still get away with this language once you are in management.

Watch out for damages

If the provision is in your severance agreement, they'll try to stick in some heinous penalty if you violate, with no similar provision for themselves (because, of course, they'd never violate confidentiality). They'll say if you violate you must return all of your severance, or that you have to pay liquidated damages of something like $5000. Don't agree to that if you can help it. I actually sat through a witness deposition of a person who wasn't testifying the way the employer would like, so they asked her if she'd told anyone about her severance agreement. She admitted she'd told her mom. The lawyers indicated that she'd violated her confidentiality agreement and they would be coming after her. Can you say witness tampering?

Anyhow, it's tempting to tell immediate family members, fiances, domestic partners or someone else who isn't included in the language about who you can tell. If you violate the agreement, let the employer prove they were damaged. I'd like to see them prove they were damaged when you told your dad.

If you really can't get them to budge on the liquidated damages and can't afford to tell them to go pound sand, then think about who you can't resist telling and make sure they're on the list. If you're going to tell your fiance or domestic partner, list them. It's way tempting to hurt someone after a breakup by calling the ex-employer and telling them you know everything, so make sure you zip it if you aren't allowed to tell. If the employer agrees to include them, the employer will want to include language that you'll tell them about the confidentiality and you'll be liable if they breach, so be careful who you tell.

It's tempting to tell people how you got a great deal, how much more you make than that jerk over in the corner, or how much they paid you when you left. That's why the company put a confidentiality provision in your agreement. Don't give into temptation once you agree to confidentiality. Your former employer will very possibly come after you if you blab.