Can I Serve as a Whistleblower if I Signed an NDA?

Many companies require their employees to sign non-disclosure agreements (NDAs) as a condition of their employment. This is a valid means of protecting sensitive, proprietary, and confidential business information—and it is permissible in most cases.

However, companies cannot use NDAs to prevent their employees from disclosing unlawful activity to law enforcement authorities.

Multiple federal statutes and regulations prohibit companies from using NDAs to prevent whistleblowing. Whistleblowers play an important role in the federal government’s efforts to expose all forms of fraud, waste, abuse, and other illicit corporate activity—and federal law protects whistleblowers accordingly.

Companies Cannot Use NDAs to Prevent Whistleblowers from Coming Forward

Among other protections, federal law makes clear that companies cannot use NDAs to prevent whistleblowers from coming forward. Not only do employees have the right to disclose violations of the law to the appropriate authorities, but they may also have an obligation to do so in certain circumstances. Employers cannot interfere with these rights or obligations. Not only would doing so effectively force employees to be complicit in their employers’ unlawful activities, but it would also severely restrict the federal government’s ability to pursue civil and criminal law enforcement actions when warranted.

With this in mind, employees who are subject to NDAs can blow the whistle on forms of corporate misconduct including (but by no means limited to):

• Anti-money laundering (AML) violations
• Antitrust violations
• Bribery and corruption
• Corporate tax evasion and tax fraud
• Customs, trade, and tariff violations
• Government contract, grant, and program fraud
• Securities and commodities law violations
• Violations of consumer protection, environmental protection, and other federal laws

To be clear, to qualify as protected whistleblowers, employees must come forward through the appropriate channels. Employees who “go public” run the risk of improperly disclosing protected information while also failing to secure the protections that are available to whistleblowers under federal law. In some cases, employees who serve as whistleblowers will be entitled to monetary awards as well—but this, too, requires coming forward through the federal government’s specified means.

Coming Forward As a Whistleblower When You Have an NDA

What are the “appropriate channels” for blowing the whistle on corporate fraud, waste, or abuse? While the answer to this question depends on the specific circumstances of each individual case, the options for securing federally protected whistleblower status generally include:

Filing a Qui Tam Lawsuit Under the False Claims Act

The False Claims Act (FCA) prohibits companies from engaging in all forms of fraud, waste, and abuse under federal contracts, grants, and programs. This includes both submitting “false and fraudulent claims” for reimbursement as well as submitting “reverse false claims,” which involves failing to pay amounts owed.

Exposing fraud, waste, and abuse under the FCA involves filing a qui tam lawsuit in federal court. While whistleblowers who are subject to NDAs may need to be careful about disclosing confidential or proprietary information publicly in their qui tam filings, federal law expressly allows whistleblowers to provide the government with the information it needs to pursue enforcement.

The FCA protects whistleblowers who file qui tam lawsuits, and whistleblowers who file successful qui tam lawsuits are entitled to a percentage of the funds the government recovers. This percentage generally ranges from 15% to 30% depending on the whistleblower’s level of involvement, among other factors.

The U.S. Commodity Futures Trading Commission (CFTC) Whistleblower Program

The U.S. Commodity Futures Trading Commission (CFTC) handles corporate whistleblower cases under the Dodd-Frank Act, Commodity Exchange Act, and various other federal statutes. The CFTC accepts whistleblower complaints directly, and it issues whistleblower awards in appropriate cases. CFTC whistleblower awards generally range from 10% to 30% of the amount recovered.

The U.S. Department of Justice (DOJ) Corporate Whistleblower Awards Program

While the U.S. Department of Justice (DOJ) is responsible for investigating whistleblower complaints filed under the False Claims Act, it also accepts whistleblower complaints directly under its Corporate Whistleblower Awards Program. This Program is focused primarily on exposing four types of illicit corporate conduct:

• Crimes involving financial institutions and their employees;
• Foreign corruption involving privately-held companies;
• Domestic corruption involving all companies; and,
• Healthcare fraud schemes targeting private insurers.

As the DOJ explains, “a whistleblower who provides the Criminal Division with original and truthful information about corporate misconduct that results in a successful forfeiture may be eligible for an award.” Under the current terms of the DOJ’s Corporate Whistleblower Awards Program, eligible whistleblowers can receive up to 30% of the first $100 million the DOJ recovers and up to 5% of any amount between $100 million and $500 million.  

The U.S. Securities and Exchange Commission (SEC) Whistleblower Program

The U.S. Securities and Exchange Commission (SEC) handles corporate whistleblower cases involving violations of the Sarbanes-Oxley Act (SOX) and other federal securities laws and regulations. Notably, while federal whistleblower laws protect employees who have signed NDAs generally, SEC Rule 21F-17 specifically states:

“No [company] may take any action to impede an individual from communicating directly with [SEC] staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by § 240.21F-4(b)(4)(i) and § 240.21F-4(b)(4)(ii) of this chapter related to the legal representation of a client) with respect to such communications.”

As this makes abundantly clear, companies cannot use NDAs to prevent their employees from reporting securities law violations to the SEC. This includes (but is by no means limited to) violations involving private placements, initial public offerings (IPOs) and initial coin offerings (ICOs), public disclosures, and investment advisory and brokerage services.

Other Whistleblower Programs Across the Federal Government

Along with the CFTC, DOJ, and SEC, several other federal agencies have established whistleblower programs as well. Employees can file whistleblower complaints under all of these programs regardless of whether they have signed a non-disclosure agreement (NDA) or any other contract that includes confidentiality provisions (including severance agreements and settlement agreements, among others).

Making Informed Decisions as a Prospective Whistleblower When You Have an NDA

While all employees (and former employees) have the right to come forward and expose illicit corporate conduct, individuals who have information about fraud, waste, abuse, and other forms of misconduct must be careful to protect their legal rights. Being careful starts with making informed decisions. At Oberheiden P.C., our federal whistleblower lawyers are available to provide legal advice and representation with respect to matters including:

• What to do if your employer (or former employer) threatens to sue you under your NDA;
• What to do if your employer (or former employer) sues you under your NDA after you blow the whistle;
• Making an informed decision about whether to serve as a federal whistleblower;
• Gathering confidential or proprietary files and information in support of a federal whistleblower complaint;
• Filing a whistleblower complaint under the False Claims Act or a federal whistleblower program;
• Working with the federal government as it investigates your whistleblower complaint;
• Protecting your rights (including your right to confidentiality or anonymity) as a federal whistleblower; and,
• Negotiating and securing your whistleblower award if you become entitled to receive one.

Committing to coming forward as a federal whistleblower is a big decision—and it is not a decision you should take lightly. At the same time, however, time may be of the essence. Once you get in touch, our lawyers will begin working with you immediately to help you make an informed decision about whether to come forward as efficiently as possible. We provide these services free of charge; and, if you decide to blow the whistle, our legal fees (if any) will be calculated as a percentage of your whistleblower award if your case is successful.

What Are Your Next Steps as a Prospective Whistleblower?

With all of this in mind, what are your next steps as a prospective whistleblower if you have an NDA?

If you have any confidential or proprietary information in your possession, you should keep this information secure, and you should consult with a lawyer as soon as possible. You should also consult with a lawyer before removing any other information from your employer’s systems or premises—as this could potentially violate your NDA. While employees who have NDAs are clearly entitled to serve as whistleblowers, they must still be careful to respect their legitimate contractual obligations.

There are many other ways an experienced whistleblower lawyer will be able to help you as well; and, ultimately, you will want to rely on your lawyer’s advice when deciding whether to come forward. Again, you can get started with a free (and completely confidential) consultation, and speaking with one of our lawyers does not obligate you to move forward.

Contact the Federal Whistleblower Lawyers at Oberheiden P.C.

Do you need to know more about serving as a whistleblower when you have an NDA? If so, we encourage you to contact us promptly. To speak with one of our senior federal whistleblower lawyers in strict confidence as soon as possible, call 888-680-1745 or tell us how we can contact you online now.