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Confidentiality agreements can help both sides – but be careful!

Recently, a private school in Miami called the Gulliver Preparatory School decided not to renew the contract of its 69-year-old headmaster, Patrick Snay. Patrick sued the school for age discrimination.

The school settled the case by agreeing to pay Patrick $80,000. As part of the deal, Patrick signed a “confidentiality agreement.” This was a written contract saying that Patrick wouldn’t tell anyone the details of the settlement other than his wife and his lawyers.

Not long afterward, however, Patrick’s college-age daughter Dana wrote on Facebook that “Ma and Pa Snay won the case against Gulliver,” and bragged, “Gulliver is now officially paying for my vacation to Europe this summer.”

The message went out to more than 1,000 of Dana’s Facebook friends, including a number of Gulliver students and graduates.

The post eventually made its way back to school officials. The school claimed that it was evidence that Patrick had violated the confidentiality agreement, and it refused to pay the $80,000.

The result? A Florida appeals court ruled that since Patrick had told his daughter about the settlement, he had violated the contract, and the school could keep all the money.

The case is an important reminder that confidentiality agreements have to be taken seriously and approached with care.

Confidentiality agreements aren’t completely new, but they’re appearing more and more often in employment disputes. If properly used, they can benefit both sides of a case.

Employers often like the agreements because they allow them to settle a lawsuit without attracting a lot of embarrassing publicity.

But employees can benefit from them, too. For instance, many employees want the results of a lawsuit kept quiet, because they’re afraid that other companies will be reluctant to hire them in the future if they become aware that they sued a previous employer.

Some cases involve employees with a disability, or employees who were partially at fault for an incident, and they would rather not make the details public.

In general, confidentiality agreements are legally enforceable, but not always – so it can be important to speak with an attorney about the contract you’re planning to sign.

For instance, confidentiality agreements, like all contracts, require “consideration.” That means that if an employee is agreeing to remain silent, he or she must receive something in return.

If an employee is signing a confidentiality agreement as part of a settlement involving a financial payment, then the payment usually qualifies as consideration. But if a company settles a case and then comes back sometime later and asks for a separate confidentiality agreement, without offering anything in return, then the agreement might not be legally valid.

Confidentiality agreements might also be illegal if they go too far. For instance, an agreement might be invalid if it prevents an employee from revealing information that’s already publicly available anyway – such as court records. And if an agreement prevents an employee from revealing settlement details to a spouse, a financial advisor, or a tax preparer, this might be improper because it’s simply unfair.

Some judges have refused to accept a confidentiality agreement if it would cover up something hazardous to the public, or if it would hush up systemic violations of wage-and-hour laws that could be hurting other employees.

If you do sign a confidentiality agreement, it’s important to make sure you completely understand all the terms and everything that’s required. Otherwise, like the Snay family, you could inadvertently give up your rights.

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