Published on April 10th, 2012 by Alan Sklover
“To keep your secret is wisdom;but to expect others to keep it is folly.”
- Samuel Johnson
ACTUAL CASE HISTORIES*: Rena consulted our firm with an unusual question: “Am I permitted to share my employer’s confidential information with my attorney in order to get legal advice?” Rena’s question was interesting, but the reason she asked it was more interesting.
As Corporate Controller, Rena was responsible for direct supervision of all accounting and financial functions of her corporate employer. She was also part of a team that created and implemented policies and procedures to identify, resolve and document accounting issues. One day, Rena came upon an email that made her believe that her employer was using an improper accounting treatment regarding payments made to overseas Consultants. She did some internal research, and then raised her concern with the Office of the General Counsel (that is, her employer’s chief lawyer.)
For the first time in Rena’s six years with the company, she noticed that she was being left out of meetings, isolated from others she usually worked with, and denied information necessary to do her job. Soon after that, her direct supervisor accused her of “sloppiness in thinking,” without any specifics or explanation. She felt what was happening to her violated her employer’s anti-retaliation policy. And so she retained an attorney to help her resolve the problem. She showed her attorney the email in question, and her employer’s anti-retaliation policy, and, too, internal reports of payments made to the Consultants.
As often happens, Rena’s attorney wrote to her company’s General Counsel, and in his letter quoted the email, the anti-retaliation policy, and the internal reports. The next day – without warning – Rena was fired and escorted out of the building for “gross misconduct,” identified as her sharing with her lawyer the company’s secrets, which he had inadvertently confirmed in his own letter to the company. It was characterized as a breach of the Company’s Confidentiality policy which forbids “sharing or divulging any Confidential Information with any person outside the Company.” For a Corporate Controller, this was a devastating career blow. It also resulted in Rena’s loss of all of her stock options, any bonus for the present fiscal year, and even the right to collect Unemployment Benefits. Ouch!
Rena was aghast and perplexed; her attorney was irate. Rena came to us for a second opinion.
Rena was not happy about what we told her. Her attorney was even more upset.
LESSON TO LEARN: Employers have a legitimate need and a legal right to make sure that their “confidential information” is kept secret, because confidential information about a company that gets out can be used by its competitors to help them compete against it. The many types of “Confidential Information” are almost limitless, and can include information (as well as documentation) about a company’s (a) customers, (b) strategic plans, (c) formulas, (d) unique business methods, (e) employees, (f) vendors, and (g) finances, just to name a few. Efforts to maintain confidentiality are entirely proper, provided however that the efforts, the information and the manner of enforcement are, themselves, proper.
“Confidential Information” does not include (i) information that is publicly available, such as the location of a company’s offices, or (ii) information that the company, itself, has disseminated outside the company, such as statements included in advertisements. Nor does “confidential information” include (iii) information with no value, such as the fact that the company employs both women and men.
Many employers require that their employees sign a written Confidentiality Agreement. Some employers have written Confidentiality Policies in their Employee Handbooks. Whether or not Confidentiality Agreements have been signed, or written Confidentiality Policies have been disseminated, the law views all employees as having a duty of confidentially as one part of all employees’ larger duty of loyalty to their employers.
Here is a common Confidentiality provision:
“The Employee promises to maintain strict confidentiality of the Employer’s Confidential Information, both during and after his or her employment. Confidential Information means information about the Employer, its business, and its customers, customer prospects, vendors, other employees and investors which is not generally known outside Employer, which Employee learns of in connection with his or her employment by the Employer, and which might prove advantageous to the Employer’s competitors. Confidential Information includes: “(1) Employer’s business plans, policies and finances; (2) Employer’s financial projections, including without limitation as to annual sales forecasts, computations and marketing plans; (3) customized software, marketing techniques, production methods; and (4) identity of former, present and targeted customers, vendors, investors and employees.”
When reading that Confidentiality provision, did you notice any exception for sharing confidential information or documentation with your attorney? Of course not, because none exists. It is for this simple reason that an employee’s sharing confidential information or documentation with his or her attorney is a violation of required Confidentiality, and thus could be considered gross misconduct worthy of immediate firing for “cause,” as happened to Rena.
“But,” you might say, “How can I get necessary legal advice on employment-related issues if I can’t share confidential information and documentation with my attorney?” The answer is: You need to be able to do that, and it is fine to do that, but neither you nor your attorney should ever admit that you have done that, and the law says that is OK.
You see, everything you share with your attorney, and your attorney shares with you, is “privileged and confidential,” and neither you nor your attorney should ever disclose what it was that was shared between you and him or her. That includes spoken communications, written communications and digital communications, and sharing of documents, too. This rule of “privilege” is an absolute one, and an important one, and one that many people don’t keep in the forefront of their minds.
The Lesson to take away is this:
“It is a violation of your confidentiality obligations to your employer for you to share with your attorney information or documentation that is confidential. However, if you do share such information or documentation with your attorney, neither you nor your attorney should ever admit that you have done so, because the law protects all attorney-client communications, even if you are under oath. In response to any question about this, just say, “I don’t share what I discussed with my Legal Counsel.”
Sadly, it was Rena’s attorney who “spilled the beans” – or, more accurately, disclosed what should have been held in confidence between Rena and him – in his letter to her employer’s General Counsel. That error was most fundamental – and damaging – and totally unnecessary.
WHAT YOU CAN DO: When obtaining legal counsel on employment matters, bear this lesson in mind, and it might be wise to remind your attorney of it, as well. Here are some other pointers to assist you in this process:
1. Be sensitive to your confidentiality obligations. – Chances are quite high that you deal with confidential information each and every day on a regular basis. But it’s also quite likely that you don’t think much about the many dangers that exist in your doing so. Being careful about (a) what is confidential, and (b) who you can share it with, is even more important when it comes to written communications and, especially, email messages.
2. If you have questions regarding confidentiality, don’t hesitate to seek guidance. –Sometimes you can be unsure if something is confidential, or a certain communication would be improper. For example, do you need prior permission to share accounting or tax information with the company’s outside auditors? As other examples, do you need prior permission to share confidential data with the company’s Board of Directors? The company’s insurer? How about law enforcement authorities? Depending on the matter before you, don’t hesitate to ask General Counsel’s office, or your own attorney, for guidance. If you are going to err, err on the side of caution. Remember that old war-time saying: “Loose lips sink ships.”
3. Note that your confidentiality obligations continue even after your employment ends. – People sometimes forget that the confidentiality obligation “survives” the end of employment. You must assume that it continues forever. While it may be a little less risky to share confidential information with your attorney after the employment relation ends, your violation of confidentiality – if it reaches your former employer – could result in loss of unvested stock or stock options, forfeiture of previously-provided benefits, such as 401k matches, and even “retroactive firing,” that is, changing your HR file to indicate that you were fired, even if you resigned, under a legal theory called “after-acquired cause.”
4. You might want to remind your attorney of his or her duties in this regard. – Some attorneys do little or no employment law work, and so are not familiar with the law in this regard. Likewise, some attorneys do little or no Courtroom work, where issues of “attorney-client privilege” commonly arise. Whenever your attorney may be contacting your employer, or even a former employer, on your behalf, you might want to mention this concern with him or her. Attorneys in these circumstances have to choose very carefully what they say, and how they say it, to avoid a real problem for their clients.
SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work and in your career. Negotiation and navigation of work and career issues requires that you think “out of the box,” and avoid risks at every point in your career. Knowing ways to lower and eliminate risks gives you a distinct advantage in navigating workplace life. Knowing ways to avoid and resolve disputes is even more advantageous. Positioning yourself to obtain maximum advantage is perhaps most important. Learning the “in’s and out’s” of doing so is what we are here for. Now, my friend, it’s up to you.
Always be proactive. Always be creative. Always be persistent. Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what SkloverWorkingWisdom™ is all about.
*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.
Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.
Sklover Working Wisdom™ and Sklover’s Negotiating for Yourself at Work™ are trademarked newsletter publications of Alan L. Sklover, of Sklover & Donath, LLC, a law firm dedicated to the counsel and representation of executives in matters of their employment, compensation and severance. Nothing expressed in this material constitutes legal advice. Please note that our attorneys are admitted to practice in the state of New York, only. When assisting clients in other jurisdictions, we retain the assistance of local counsel and/or obtain permission of local courts to appear. Copying, use and/or reproduction of this material in any form or media without prior written permission is strictly prohibited. All rights reserved. For further information, contact Sklover & Donath, LLC, 10 Rockefeller Plaza, New York, New York 10020 (212) 757-5000.
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