Recent developments show that employers face both incentives and threats from the Obama Administration designed to ensure that employees know of their right to engage in “whistleblowing” (i.e., sharing possible unlawful activity with government agencies). Two recent examples are the federal Defend Trade Secrets Act (DTSA) and recent enforcement actions by the Securities and Exchange Commission (SEC).
The DTSA, enacted on May 11, 2016, provides employers with the right to recover greater damages if an employee has misappropriated trade secrets “willfully and maliciously.” But, the ability to recover these greater benefits are available only if the employer has informed employees of their right to disclose trade secrets without any civil or criminal liability if done solely in whistleblowing – i.e., if shared with a government official or attorney “solely for the purpose of reporting or investigating a suspected violation of law” or in filing a lawsuit with the trade secrets under seal. Thus, while the DTSA provides employers with the possibility of obtaining greater benefits, it requires employers to disclose in writing the employees’ immunity from prosecution if the trade secret disclosure occurs solely as part of a whistleblowing activity.
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