Last week, President Trump made news when he decried “leaks” of information to news media that allegedly occurred within other federal intelligence agencies. Now, while not many employers have to worry about leaks within their business related to matters of national security, most (if not all) companies have information that they would rather not get out into the open.
Such public displays of private information can run a gamut of potential consequences. For some information, it may place the company in a negative light. For other information, it may have grave consequences on the viability of the business. This begs the question, what are some of the more common issues and how should employers respond?
Trade Secrets and Confidential Information
We’ll start with disclosures that are most likely to have the most critical impact on any employer. I refer to confidential information here as the stuff companies want to keep private, but it does not rise to the level of trade secret. It is not protected by law but an employer can help protect it by entering into private agreements with employees. Trade secrets, on the other hand, are information that has real or potential economic value because it is not generally known to the public and is the subject of reasonable efforts to maintain its secrecy. Qualifying trade secrets are protected from misappropriation by state and federal law.
Employers can discipline employees for violating policies and agreements concerning confidential and trade secret information. In the case of trade secrets, a “leak” should be met with appropriate discipline to ensure protection of the trade secret. Without any response, the company may risk statutory trade secret protections. Legal cases based on trade secret claims often hinge on whether the company undertook reasonable efforts to maintain secrecy. Failing to discipline an employee who discloses trade secret information may leave the company open to arguments that it did not practice these necessary efforts. Additionally, the business may risk losing the argument that the information is not generally known to the public. Thus, “leaks” in this regard may compel an employer to provide a significant response.
False Claims Act and SOX
Any employer doing business with the federal government should become familiar with the False Claims Act. Claims under this law, otherwise known as qui tam lawsuits, are essentially a complaint brought by (usually) an employee alleging the defendant is defrauding the government. Here, a “leak” would take the form of a federal court complaint as the plaintiff only stands to recover if the information is not publicly known prior to the lawsuit.
Similarly, employers with businesses regulated the Securities and Exchange Commission should become familiar with the Sarbanes-Oxley Act of 2002 (SOX). Relevant “leaks” under SOX can take the form of reports to a regulatory or law enforcement agency, members or committees of Congress, or an investigating supervisor.
Unlike dealing with disclosures of confidential or trade secret information, employers who are addressing a complaint under the False Claims Act or SOX should proceed cautiously. This is because these laws include protections from retaliation, which can take the form of termination, demotion, suspension, harassment, or many other actions. For example, if a False Claims Act plaintiff is found to have been terminated for reporting the fraud, the employer may be ordered to reinstate the employee and pay double the employee’s lost wages as damages.
Retaliation for Opposition and Other Laws
Like the False Claims Act, a host of workplace-related laws prohibit retaliation against employees who engage in what is deemed “protected” conduct. Laws like Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Equal Pay Act, the Americans with Disabilities Act and the Genetic Information Non-Discrimination Act include protections for employees via their respective “opposition” and “participation” clauses. The opposition clause prohibits discrimination because an individual opposed any practice made unlawful by the respective law. The participation clause prohibits discrimination because the individual made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under the respective law.
Relevant to this discussion, a “leak” may take the form of an employee engaging in “opposition” to allegedly unlawful conduct. The EEOC, in its recently released enforcement guidance on retaliation, highlights that raising complaints to individuals outside the employer or publicly raising complaints, such as engaging in picketing to oppose a violation of law, has been found to be protected activity. Discipline, termination, or other adverse actions taken in response to such protected “opposition” activity are likely to lead to a charge of discrimination. Employers need to proceed cautiously where these circumstances are present so as to not run afoul of these laws.
This may be the most common form of “leaks” for employers to address. There are many stories of employees taking to social media to discuss work. Sometimes, this can result in employees discussing confidential or trade secret information about work. More often the case is that employees are discussing what is happening at work that an employer may prefer to stay out of the public view.
Before responding to a social media leak, employers should consider whether the post, tweet, or update concerns the terms or conditions of employment. That is, if an employee is discussing such topics as how much they are paid, how they are treated by a supervisor, the hours they work, or other related matters, the social media post may be protected by the National Labor Relations Act as Section 7 activity.
For example, in the case of Triple Play Sports Bar and Grille v. NLRB, employees engaged each other in a social media post concerning the employer’s tax withholdings on employee paychecks. The Second Circuit Court of Appeals agreed with the NLRB’s conclusion that the post and subsequent employee “likes” were protected, concerted activity under the NLRA, and discharging the employees for this social media activity was deemed unlawful. Here again, social media is another area where care must be taken before responding to employee leaks on social media.
Employee “leaks” of private information are not exclusive to the federal government. They can cause trouble for any workplace and may even have critical effects on information that enjoys strong legal protections. How and when an employer should respond is different in each scenario, but any leak should be carefully examined to stay in compliance with state and federal employment laws.