The Bottom Line
No matter what your NDA says, federal law protects your right to report suspected violations of law to government agencies. An NDA that purports to prevent such reporting is unenforceable to that extent - and may indicate other problems with the agreement.
The Defend Trade Secrets Act of 2016 (18 U.S.C. Section 1833(b)) provides immunity from liability for disclosure of trade secrets to a government official or attorney for the purpose of reporting or investigating a suspected violation of law.
Employers must include notice of this immunity in any contract or agreement governing trade secrets. Failure to provide notice limits the employer's ability to recover exemplary damages or attorney's fees.
Federal Whistleblower Protections
Multiple federal laws provide whistleblower protections that override any NDA provisions. Here are the key protections you should know:
Defend Trade Secrets Act (DTSA)
Provides immunity for disclosing trade secrets to government officials or attorneys when reporting suspected violations. Employers must notify employees of this right.
SEC Whistleblower Program
Protects employees who report securities violations. Includes financial rewards of 10-30% of sanctions over $1 million. Cannot waive rights in any agreement.
Sarbanes-Oxley Act
Protects employees of public companies who report fraud, securities violations, or shareholder deception. Covers retaliation in the form of discharge, demotion, or harassment.
Dodd-Frank Act
Prohibits retaliation against employees who report potential violations to the SEC, CFTC, or other agencies. Includes private right of action for retaliation claims.
National Labor Relations Act
Protects employees' rights to discuss wages, hours, and working conditions with each other. NDAs cannot restrict these "concerted activities."
False Claims Act (Qui Tam)
Allows employees to file lawsuits on behalf of the government for fraud against government programs. Whistleblowers can receive 15-30% of recovered funds.
What the DTSA Notice Must Include
The Defend Trade Secrets Act requires employers to provide notice of whistleblower immunity in any contract or agreement that governs the use of trade secrets or confidential information. The notice must inform employees of their immunity for:
- Disclosure to government officials - Sharing trade secrets with federal, state, or local government officials for the purpose of reporting or investigating a suspected violation of law
- Disclosure to attorneys - Sharing trade secrets with an attorney solely for the purpose of obtaining legal advice about whistleblower rights
- Court filings under seal - Disclosing trade secrets in a court document filed under seal in a lawsuit or other proceeding
- Anti-retaliation lawsuits - Using trade secret information in a retaliation lawsuit if the trade secrets are filed under seal and not disclosed except pursuant to court order
"Pursuant to 18 U.S.C. Section 1833(b), Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law. Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal."
If your employer's NDA does not include DTSA whistleblower notice, the employer cannot recover exemplary damages or attorney's fees in any action against you under the DTSA. This is not just a technicality - it significantly limits what the employer can recover if they claim you misappropriated trade secrets.
What You CAN Report (Even With an NDA)
Always Protected Disclosures
- Suspected violations of federal or state law to government agencies (SEC, DOL, EPA, FBI, etc.)
- Securities fraud, accounting irregularities, or financial statement manipulation
- Workplace safety violations to OSHA
- Discrimination or harassment to the EEOC
- Environmental violations to the EPA
- Tax fraud or evasion to the IRS
- Antitrust violations to the FTC or DOJ
- Information requested by government investigators or pursuant to subpoena
Also Protected (NLRA Rights)
- Discussing your own wages, hours, or working conditions with co-workers
- Organizing with other employees about workplace issues
- Filing complaints about labor law violations
NDAs cannot prevent you from testifying truthfully in legal proceedings if subpoenaed. They also cannot prevent you from cooperating with government investigations. Any clause purporting to restrict such cooperation is void and may itself be evidence of wrongdoing.
What Is NOT Protected
Whistleblower protections are not unlimited. Understanding the boundaries helps you stay protected:
Generally Not Protected
- Media disclosure - Going to the press instead of government agencies may not be protected (with limited exceptions)
- Social media posts - Publicly sharing confidential information, even about wrongdoing, may not be protected
- Competitor disclosure - Sharing trade secrets with competitors is never protected, even if you believe wrongdoing occurred
- Personal grievances - Complaints that only affect you personally (not involving law violations) may not be protected
- Disclosures not made in good faith - Knowingly false reports are not protected
Whistleblower protection requires that you have a reasonable, good-faith belief that a violation of law occurred. You do not need to be correct, but you must genuinely believe it. Disclosures made for personal revenge, competitive advantage, or without any factual basis are not protected.
How to Report Properly
To maximize your legal protections, follow these guidelines when reporting suspected wrongdoing:
Step 1: Document Everything
Before reporting, document the facts you have observed. Keep copies of relevant documents in a secure, non-work location (but be careful not to take documents you have no right to access). Note dates, times, witnesses, and specific facts.
Step 2: Consider Internal Reporting First
Many whistleblower protection laws provide enhanced protections if you first report internally (to compliance, HR, legal, or ethics hotline) before going to external agencies. However, this is not always required, and in some cases (such as imminent harm or complicit management) external reporting may be appropriate first.
Step 3: Report to Appropriate Government Agency
- Securities violations: SEC Whistleblower Office
- Workplace safety: OSHA
- Employment discrimination: EEOC
- Environmental violations: EPA
- Tax fraud: IRS Whistleblower Office
- Government contractor fraud: DOJ (qui tam)
- General federal crimes: FBI
Step 4: Consult an Attorney
For significant matters, consult a whistleblower attorney before reporting. Attorney consultations are protected under the DTSA. An attorney can help you understand your rights, maximize your protections, and in some cases pursue whistleblower rewards.
The SEC, CFTC, and IRS offer financial rewards to whistleblowers whose information leads to successful enforcement actions. SEC rewards range from 10-30% of sanctions over $1 million. These can be substantial - SEC whistleblower awards have exceeded $100 million in some cases.
Protection Against Retaliation
Federal and state laws prohibit employers from retaliating against employees who engage in protected whistleblower activity. Prohibited retaliation includes:
- Termination or constructive discharge
- Demotion or reduction in duties
- Denial of promotion or career advancement
- Reduction in pay or benefits
- Unfavorable reassignment or transfer
- Threats or intimidation
- Negative performance reviews not based on legitimate factors
- Blacklisting in the industry
If You Experience Retaliation
- Document everything - Keep records of the retaliation and the timeline
- File promptly - Many whistleblower statutes have short filing deadlines (often 90-180 days)
- Report to appropriate agency - OSHA handles many whistleblower retaliation complaints
- Consult an attorney - Retaliation claims can be complex and time-sensitive
Many whistleblower retaliation claims must be filed within 90 to 180 days of the adverse action. Missing these deadlines can permanently bar your claim. If you believe you have experienced retaliation, consult an attorney immediately.