Departing employees oftentimes consult with counsel regarding separation agreements or potential legal action. A recent Houston Court of Appeals case regarding workplace employment issues provides employees a stern warning to adhere stringently to confidentiality agreements.
In Vaughan, an ex-employee sued his former employer seeking unpaid compensation. His employer responded contending Vaughan materially breached the confidentiality provision of an employment agreement he entered years before, thereby absolving it of any obligation to pay. Basically, it alleged Vaughan misappropriated confidential documents and disclosed them.
Vaughan presented commonly-heard reasons for his actions:
- In the event of a regulatory investigation, he wanted the documents and files to protect himself; and
- While he admitted disclosing the documents, he contended he only disclosed them to his attorney.
The court determined sufficient evidence existed whereby the jury could find Vaughan materially breached the employment agreement’s confidentiality provision. Therefore, the court excused the employer from further performance – in this case, paying compensation.
The case presents a number of points to both practitioners and departing employees. For the practitioner, it’s important to note the appellate court analyzed the jury’s determination of material breach based on a jury question that failed to include a legal definition of material. Instead, it looked to the common meaning. This determined whether the jury’s decision was legally sufficient.
For the departing employee, the decision indicates courts will not develop legal carve-outs from a negotiated confidentiality provision. Stated another way, while an employee’s interest in protecting himself from investigations, or even in consulting with counsel, are logical, such will not trump an employee’s obligation to maintain the confidentiality of the employer’s information.
For more information regarding workplace employment issues, contact employment lawyer Gregory M. Clift at 214.239.2777 or clift@RoggeDunnGroup.com.