Confidentiality Agreements

bbeagan · April 2005

This a long and sorted tale .. I hope that it holds your interest ...

In December of 2003 we experienced a problem with a few former employees using our proprietary and client information to form a company that would be direct competition with our product and service offerings.

I was asked by the CEO to draft a new Confidentiality Agreement.

I complied and drafted a more stringent (narrowly focused) document. I, also, forwarded it to outside counsel for their review and after some
editing by outside counsel forwarded it to our General Counsel for his review.

By February 10, 2004 the Confidentiality Agreement (CA) was approved by all parties and I forwarded it to the CEO for her review and
final approval.

Now for the interesting part. All employees (including the Officers of the Company: CEO; VP, Business Development; VP, CFO; and VP, General
Counsel) received a copy of the new Confidentiality Agreement all employees were given three days to review the document, sign and date, and return it to HR. Additionally, agreeing to the terms of the CA and signing it a
condition of continued employment.

All employees have complied, except for four. The Officers of this company have not signed the CA.

When I spoke to them about it last month they explained it this way:

1. CEO: "My attorney feels that the document is too onerous."
2. CFO: "I am waiting to see what the CEO does."
3. General Counsel: "I am waiting to see what the CEO does."
4. The VP, Business Development has been unable to meet with me to discuss because of his work schedule and busy travel calendar.

I have advised all four officers that:
a) The signing the CA is a condition of employment (you can imagine the laughter that ensued from that remark);
b) That as Officers they have an obligation to set an example for all employees (leadership); and,
c) That it is disingenuous for them to hold others to a standard for which they refuse to be held accountable.

As I mentioned this occurred about a month ago, and not one has responded to our last meetings and/or my comments. I am at a loss,
feeling quite impotent, and not sure what should be my next steps.

Any words of wisdom for me? If an e-mail is an insufficient communication tool for this discussion, please contact me on 281-535-7500 x118.

marc · April 2005

If your CEO won't sign the agreement he/she directed you to have drawn up, you are powerless to require it.

If he requires it of all others, then it will be just that - a requirement and the other three will either sign it and keep working or not sign it and face the consequences.

It would be extremely bad form, in my opinion, to require it of all others and not sign it himself, but that is an option. Your only other recourse, which is a very bad idea, is to go over the CEO's head to the Board of Directors or the owner(s), depending on your structure.

I would place it squarely in the lap of the CEO and say, "The next move is yours, everyone else has signed it except you and your direct reports. Let me know how what you want me to do."

Don't lose your job over this.

deniseE · April 2005

I agree with Marc. Create a paper trail showing the you've provided it to each of them...and let it go.

With or without that document, there is additional recourse when top people in a company behave badly, think Enron.

The rank and file does not need to know that the top 4 did not sign....only you need to know.

I understand that it's frustrating when the top guys don't set a great example...but sometimes the rules are different and it's not always fair...and that's just how it is.

Hang in there...

Pricehcs · April 2005

Ok, so your internal general counsel thoroughly reviewed and approved the document and now they won't sign it? Further, the CEO reviewed and approved the document prior to its release and won't sign it either? Nice.

I agree with the other posters, you should place the ball in the CEO’s court. "Your move, boss. What's your plan on this?" Reinforcing points b and c from your post are valuable, but in the end the CEO will make her own decision on this and you'll have to live with it.

#1 thing a consultant shouldn't say: "I could tell you the answer right now, but we're committed to a three month project..." #-o

ritaanz · April 2005

Hey, this is just a blimp on the road of experience. Don't sweat it. You did what was requested of you. Document your efforts and move on. If any of them responded in writing, add it to the pile.

Look at it this way. You have learned about the character and moral fiber of these folks. The CEO is trying to protect the company from other employees doing what the former employees did. He has no intention of protecting the company from himself/herself.

mbeam · April 2005

[font size="1" color="#FF0000"]LAST EDITED ON 04-21-05 AT 05:30PM (CST)[/font][br][br]Can understand your frustration. Those at the top are usually the ones with access to records and information at a much higher level than anyone else in the company. These are the people you most want to sign it not the other way around.

Not a very good example - personally I would start my new job search as wouldn't want to work with people who say one thing and do another. They're setting a horrible example.

Are you publicly or privately held? If privately, your options may be limited especially if the owner is the CEO. If you're publicly held, this is something that a Board of Directors should be aware of. Should those key execs leave and start their own competing business, they would be looking for the non-competes they signed.

lorrie · April 2005

If your confidentiality agreement is the same as a non-compete, I think you have to offer something of value in exchange for a signature. You can expect a new employee to sign as a condition of new employment, but continued employment is not a sufficient exchange. When we created a new agreement a few years back, all current employees received a check for $100 or something like that, and were expected to sign or resign. The amount seems insignificant, but everything I read indicated the need for it.

As for enforcement, whenever I have a problem with any issue I go to my supervisor and say here is the problem - how important is this to you? If it is important, then I need the authority to enforce, and if you don't feel it is important, then I won't keep wasting my time on empty deadlines.

Then, as the others here have said, document your efforts and move on.

Confidentiality Agreements

Comments