Want to Whistleblow but Signed a Non-Disclosure Agreement?
Have you ever seen something at work that didn’t seem to be quite up to snuff? Did you ever think of reporting it to your supervisor? The CEO of the company? The government? Or did you look away because you had already signed a non-disclosure agreement?
The question of whether or not to report your company for perceived misconduct is hard enough to decide, even without a non-disclosure agreement in place. Life-changing repercussions may exist for the whistleblower: people could view the violation as trivial enough that they label you a tattletale, or the violation could be damaging enough that you are terminated for reporting it. Add onto that the threat of an employer suing you for breaching a non-disclosure agreement, and the decision becomes much more complex.
But here is a silver lining for employees, and a warning for employers in California: reporting illegal conduct to a government agency will likely qualify as privileged communications that cannot form the basis for breach of a non-disclosure agreement. (Greka Integrated, Inc. v. Lowrey (2005) 133 Cal. App. 4th 1572, 1581.) Furthermore, an employee being sued for breach of a non-disclosure agreement due to whistleblowing activities may also consider filing an anti-SLAPP motion in response to a lawsuit, which carries heavy costs and fees for the employer if the employer loses. (See Cal. Civ. Pro. § 425.16.)
California courts have held that California’s anti-SLAPP statute—a statute created to discourage cases brought primarily to “chill the valid exercise of . . . freedom of speech”—may apply to contractual disputes, including situations where an employer attempts to silence its employee’s ability to report perceived illegal activities to government agencies. (See Greka, 133 Cal. App. 4th at 1581; No Doubt v. Activision Publ’g, Inc. (2011) 192 Cal. App. 4th 1018, 1027.) This means that if an employee whistleblower is sued by her employer for allegedly breaching a non-disclosure, the employee can file an anti-SLAPP motion to get rid of the lawsuit from the outset.
As an added bonus for employees (and disincentive for employer’s to sue for breach), this statute has an attorney fee shifting provision that applies in most situations. See Cal. Civ. Pro. § 215.16, subd. (c)(1). If the employee prevails on her anti-SLAPP motion – which is increasingly likely in the wake of Greka – the employee is automatically entitled to recover from her employer her attorney fees and costs associated with filing the motion.
Whether you are an employer that requires employees to sign non-disclosure agreements, or an employee considering whether to report your employer’s illegal activities to the government, know that under current California law, legal defenses exist to a claim of breach of a non-disclosure agreement, and those defenses may lead to hefty attorney fees and costs.
Dorothy Yamamoto is an associate at Dhillon Law Group Inc.
