The Consumer Financial Protection Bureau (CFPB) has issued guidance stating that broadly-worded confidentiality or nondisclosure agreements (NDAs) may violate federal whistleblower laws by unlawfully deterring employees from exercising their whistleblower rights.
Employers that require employees and former employees to sign broad confidentiality or nondisclosure agreements in return for a separation agreement or continued employment risk being found in violation of the CFPB’s whistleblower regulations unless the confidentiality agreements expressly carve out an employee’s right to cooperate with agency officials and law enforcement agencies, CFPC Circular 2024-04 explains.
The guidance, issued July 24, 2024, notes that an employer can limit its liability under Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act somewhat by requiring confidentiality “to the extent permitted by law.” Circular 2024-04 says that a safer approach would be to expressly permit employees to communicate with government agencies.