Employees Beware - Confidentiality Agreements Matter

Posted on November 5, 2012 in Agreements & Negotiations

Employees need to be aware and concerned about confidential provisions in settlement agreements – they can come back and bite you. A recent case decided by a district court in the Fourth Circuit is an important reminder to employees that promises of silence matter.   In Car Pool, LLC v. Brooke Hoke, Carpool, the employer, sued its former employee Brooke Hoke, for violating their settlement agreement when she allegedly disclosed to another employee that she had settled a sexual harassment suit with Carpool.   In the settlement agreement, Hoke had explicitly stated that she had not disclosed the “prospect of settlement” to anyone.  Carpool sued her, alleging that she had disclosed the “prospect of settlement” to another employee when that employee sued them for discrimination three days after Hoke had entered into the settlement agreement with Carpool.  In suing Hoke, Carpool alleged that Hoke had breached the settlement agreement and that the agreement should be rescinded because it had been misled by Hoke’s statement that she had not disclosed “the prospect of settlement” to anyone.   The Court allowed Carpool’s claims to move forward.  Interestingly, the Court found that Carpool had stated a claim of breach of contract even though Hoke allegedly discussed the prospect of settlement with another employee prior to actually signing the settlement agreement.  The fact that the court allowed this count to go forward even though a breach of contract cannot occur until an agreement exists sends a clear message to employees – that promises to keep quiet about a settlement agreement will be enforced by the courts.   The Court also allowed the rescission of contract claim to go forward, where Carpool argued that it would not have entered into the contract with Hoke had it known that she had communicated with another employee about the settlement of her case.   What this means for you:  If you are an employee and enter into a settlement agreement with your employer and promise to keep the fact of settlement confidential, that promise must be kept otherwise you may be sued by your employer and required to return anything you received from the settlement of your claim.

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