Published on February 9th, 2016 by Alan L. Sklover
“Due to the highly confidential nature of my position
even I don’t know what I do all day.”
ACTUAL “CASE HISTORY”: Bart was a highly respected Business Development Officer for a major antiquities dealer headquartered in London. His interests, education and experience all overlapped one another. In fact, he had been fascinated with the antiquities trade – the sale, purchase and barter of ancient artifacts and treasures – as long as he could remember, and remained so to this day.
As part of an expansion of his firm, Bart had been designated to open a new Chicago office because Chicago has a large, vibrant and growing antiquities market. Chicago’s client base, comprised of art institutes, museums and wealthy individuals, was judged to be quite under-served, and so this assignment was posed a significant opportunity for Bart.
Just before relocating with his family to Chicago, Bart was asked to meet with the firm’s Head of Human Resources. Upon arrival, Bart was led to a conference room and asked by the firm’s lawyers about emails he had exchanged six months earlier with an antiquities collector in Rome, who was interested in a particular item of antique jewelry soon to be sold at auction. In his email, the Rome collector asked Bart what he thought would be the minimum acceptable auction bid. Bart’s email response to the Rome collector was that he thought it would be no more than one hundred thousand dollars.
Bart’s estimate of the minimum price was on target, with good reason: it had been decided upon by the firm’s auction department just days earlier, although it had not yet been made public. It now seemed as if Bart was being accused of disclosing confidential information – a very serious policy offense in the antiquities business, which highly prizes secrecy and integrity. Sure enough, Bart was immediately suspended without pay, pending completion of a full investigation by the attorneys. And, too, his relocation to Chicago was placed on hold.
Fortunately for Bart, he had been prudent in preserving emails of others who oversee his work. His review of emails to and from the Rome collector revealed to him that the request was originally sent from the Rome collector to the firm’s Executive Director, who had, in turn, directed it to him, with a note directing Bart to provide that requested estimate. When the Executive Director was asked, and then shown his email to Bart, he then recalled what took place, and for this reason Bart was cleared of the allegation of gross misconduct.
LESSON TO LEARN: Issues of confidentiality of business secrets, confidential information, and proprietary knowledge, are critical career issues. “Loose lips” not only “sink ships,” but they can also “torpedo careers,” as well.
These disputes are definitely on the rise, likely due to three factors: (i) increasingly competitive business conditions, (ii) a growing sensitivity to issues of confidentiality, and (ii) the greater ease and ability of employers’ closing monitoring and surveilling their employees’ communications.
As you may know, there are many companies that sell software that constantly look out for certain words, phrases and numbers in employee emails, texts and other digital communications.
The lessons to learn?
(1) take the time to understand what constitutes “confidential information” at your job;
(2) always keep in the back of your mind the four “situational exceptions” to confidentiality and non-disclosure obligations, explained below; and
(3) take certain simple steps to protect yourself from allegations of improper disclosure.
These three categories of “suggested confidentiality precautions” and – most importantly, the four “situational exceptions” to confidentiality and non-disclosure obligations – are what this newsletter issue is all about.
WHAT YOU CAN DO: To avoid confidentiality issues and pitfalls, keep these questions and answers in mind:
1. What is “confidential information” on your job? A commonplace definition of “confidential information” would be something like this:
“Confidential Information means the Company’s business information, financial statements, internal memoranda, reports, customer lists, customer information, price lists, strategic plans, financial analyses, risk and actuarial assessments, plans, proposal, work product, and other materials, data information, and documents and records that are not publicly known, construed in its broadest possible meaning, including without limitation all such information in any and all forms, whether written, oral, digital or electronic, on a computer, tape, chip, disk, drive, card, memory device, or in any other form, whether prepared by Employee, by the Company, or by others, and includes all originals, summaries, portions, and copies of any and all such information.” (Whew!)
Although that definition may seem overly complicated and wildly expansive, it is actually a simpler version of what we usually find in employment agreements, equity awards, employee handbooks, and company policies. The reason is that employers want to protect every kind, type and variety of information that they can, and they want to punish anyone who uses or divulges it to others.
Want to be safe? Just assume you cannot use for your own purposes or share with others any bit of information about the company that is not available to others by doing a simple Google search, and even material found in a Google search may be confidential if it was made public in violation of company policies on confidentiality.
You might want to review one of my previous blogposts entitled “Confidential Information – What It is NOT.” To do so, just [click here.]
2. What are the four “situational exceptions” to confidentiality and non-disclosure obligations at work? There are four primary “situational exceptions” – meaning that they arise from the circumstances – to your obligations to maintain confidentiality and not to disclose confidential information:
(i) When the Information is Necessary to Perform Your Duties for Your Employer: When one company seeks to invest in, or purchase, another company, it is necessary for the prospective purchaser to look over the prospective acquisition target’s financial books and records. To permit those secrets to be shared, it is almost always required that the prospective purchaser sign a Non-Disclosure Agreement, commonly called and “NDA” in which it agrees not to share the information with others, or use the information for their own benefit. Only then is the information and documentation made available.
If it is within your job duties to make that information available, and you know that the “NDA” has been signed, then your making that information available to the prospective acquirer is not a violation of your duties of confidentiality or non-disclosure, as your disclosure is within those job duties.
(ii) When the Information is Already Publicly – and Properly – Known by Others: If information or documentation is known to the public, or can be viewed by the public, it cannot reasonably be deemed confidential, and thus, disclosing it to others cannot be a breach of confidentiality. However, if someone else has improperly made it public – for example, a disgruntled former employee having put a customer list on the internet – then this exception is not available.
I was once in Court defending a client who had changed employers, and for the benefit of her new employer began to use the services of the same factory in China to manufacture similar products. The former employer claimed to the Judge that the identity of that Chinese factory, and how much it charged to make different products, were confidential information. The Judge said, “Can I find that out if I call them?” The answer was “Yes.” He then asked, “If I do an internet search?” The answer was “Yes.” He then asked “If I call others in the industry?” Again, the answer was “Yes.” His next statement was “Case dismissed,” and he simply walked out of the Courtroom.
(iii) Where Necessary to Comply with the Law: Let’s say your job is to file tax returns for your employer. If you file a tax return with the IRS, and it contains “confidential information,” have you violated a duty? Of course not, because it was part of your job.
Likewise, if a Court Order directs you to provide information, or a subpoena is served upon you to provide documents, you must do so, and in those instances, as a matter of law, in almost all circumstances you have not committed a breach of confidentiality or violated a non-disclosure obligation. Does that mean that you can voluntarily become a “whistleblower” and be protected? No. Does that mean that you can send a letter to a prosecutor, and be protected? No.
Note that some employment agreements, bonus awards, stock or stock options plans, retention agreements and severance agreements provide that, if you do receive a Court Order, a subpoena or similar “legal process, you need to immediately alert your employer (or prior employer), then you should do so. However, you should not, and lawfully cannot, ignore or disregard the Court Order or subpoena, or willfully miss any deadlines in either one.
(iv) With the Consent, or At Direction of, Management: If you would like to, feel a need to, are asked to, or think you should, use or disclose confidential information to persons outside your employer, if you have the consent of your employer’s management, you should be on safe ground.
This would include being asked by or directed to make such disclosure. In Bart’s situation, described above, that is precisely what “saved” him.
This would also include disclosing confidential information AFTER acquiring, and acting in reliance upon, the advice or opinion of your employer’s legal counsel or management, that what you are doing is not a violation of the employer’s confidentiality policy or any confidentiality agreement you may have signed.
Being asked to sign a non-solicitation agreement? Our “Model Letter: Response to Request You Sign a Non-Solicitation Agreement” shows you “What to Say, and How to Say It.™ Contains the 16 most common reasons to limit a non-solicit. To obtain your copy, just [click here.] Delivered by Email – Instantly!
3. How can you best protect yourself? (a) First, three simple words: “Stop and Think.” Any time you find yourself speaking, writing, emailing or otherwise communicating to people outside of your company information or documentation that just might be considered confidential, stop for a moment, and ask yourself, “Can this somehow, possibly, get me into trouble?” Not “likely” but “possibly.” Could anyone possibly claim the information or documentation is confidential?
If the information you are about to transmit, transfer, disclose or communicate might possibly be deemed confidential, try your best not to use or disclose it, unless you are very confident that your disseminating it fits within one or more of the “situational exceptions” noted above.
(b) Second, four more simple words: “Get Evidence Before Acting.” That is, if you believe you need to send information or documentation outside the company, try to get confirmation from your manager, or someone of significant authority, even perhaps an in-house attorney, either (i) that the material is not confidential, or (ii) that one or more of the situational exceptions apply to your communication or dissemination.
When in any doubt as to either, ask a manager, legal officer, compliance director, or other competent authority for counsel, approval, consent or other direction. And, in doing, so “Email is your faithful companion and protector.” It was email evidence saved the day for Bart, and may also save the day for you.
Been Accused of Breaching Confidentiality? Prepare and present your best defenses BEFORE your employer reaches its own conclusions. Use our Model Memo entitled ”Defending Yourself from Allegation of Use or Sharing of Confidential Information.” It gives you “What to Say, and How to Say It.”™ To obtain your copy, just [click here.] Delivered by Email – Instantly!
4. Incidentally, Is an Unintentional Breach of Confidentiality as much of a problem as an intentional one? Yes. While an unintentional breach of confidentiality or violation of non- disclosure duties may seem forgivable, it often is not. Additionally, confidentiality agreements and non-disclosure policies do not, in my experience, distinguish between intentional violations and unintentional ones.
P.S.: If you would like to speak with me directly about Non-Solicitation issues, or other subjects, I am available for 30-minute, 60-minute, or 120-minute telephone consultations, just [click here.] Evenings and weekends can be accommodated.
SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “out of the box,” and build value and avoid risks at every point in your career. We strive to help you understand what is commonly before you – traps and pitfalls, included – and to avoid the likely bumps in the road. For those considering being a part owner of a start up company, thinking “a long way down the road” is especially important.
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™ is a trademarked newsletter publication of Alan L. Sklover, of Sklover & Company, LLC, a law firm dedicated to the counsel and representation of employees in matters of their employment, compensation and severance. Nothing expressed in this material constitutes legal advice. Please note that Mr. Sklover is admitted to practice in the state of New York, only. When assisting clients in other jurisdictions, he retains the assistance of local counsel and/or obtains 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 & Company, LLC, One Rockefeller Plaza, New York, New York 10020 (212) 757-5000.
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