When settling a wrongful dismissal claim out of court, employees are typically asked by their employer to sign a release or agreement that outlines the settlement terms. Such documents often impose an obligation of confidentiality on the employee, whereby she agrees not to disclose to anyone the details of the parties’ settlement. The incentive for this discretion is financial – in exchange for her promise to keep the information confidential, the employee will receive a severance or other payment from her employer.
Given the routine nature of such confidentiality clauses, how significant are they? How seriously should a former employee take his promise to keep quiet? Based on the recent court ruling against former Globe and Mail columnist Jan Wong, the answer, it seems, is very seriously.
On November 3, 2014, the Ontario Superior Court of Justice upheld Arbitrator Louisa Davie’s decision that Wong had breached a confidentiality promise she made to the Globe following the end of her employment. Specifically, the Court confirmed that Wong violated her agreement “not to disclose the terms of [her] settlement” with her former employer when she included the following phrases in her 2012 tell-all book “Out of the Blue”:
… I can’t disclose the amount of money I received
I’d just been paid a pile of money to go away …
Two weeks later a big fat check landed in my account.
Even with a vastly swollen bank account …
The financial consequences of this decision were dire: Wong was ordered to repay to the Globe the $209K settlement payment she had received from the paper several years earlier after she was fired. And although certain aspects of Wong’s post-settlement legal dispute with her employer arose solely because of the unionized nature of her employment (e.g. she argued that her loss in arbitration was due in part to her union’s failure to adequately represent her), there are a few lessons that all employees can learn from her recent legal troubles:
• Err on the side of caution. If you are unsure about the scope of your confidentiality obligation, keep quiet and ask your lawyer. As in Wong’s case, you may be agreeing not to disclose not only the amount of money you received, but the fact that you received it at all.
• Beware the consequences. The settlement document containing the confidentiality clause may also set out the consequences of violating that clause. The agreement Wong signed included a “forfeiture provision” which required Wong to repay her settlement funds if she broke her promise to the Globe.
• Look before you leap. If your former employer accuses you of a breach of confidentiality and seeks to enforce its rights under a settlement agreement, think long and hard before taking them to court. After finding in the Globe’s favour, the Ontario Superior Court ordered that Wong pay both the paper and her former union $15,000 each in legal costs.
Have questions about a confidentiality agreement you signed, or are being asked to sign? Contact us!