Confidentiality Agreement Legal But Tough to Defend

Confidentiality clauses should no longer be foreign to corporate America — nor should non-compete agreements and knowledgeable human resource managers.

With these, a company can avoid certain employee situations if it effectively covers its tracks while hiring.

One employer said, if nothing else, signed and documented confidentiality agreements work as intimidation factors for employees who are considering leaving a business to work for a competitor.

Fayetteville lawyer Bob Still, a partner with Bassett Law Firm, said that while Arkansas is an employment at-will state, an employee can be terminated for any reason or for no reason at all.

“There are exceptions that overshadow the general rule,” Still said. “It is as important to know the exceptions as it is to know the general rule.

“The covenance not to compete is difficult to defend. However, it is enforceable in Arkansas under certain guidelines in terms of time and in terms of geographic territory. You cannot stop someone from competing with you indefinitely or in an unreasonable geographic territory. The decision is on a case-by-case basis.”

The agreements are not standard, rather they are written for each individual business’ core competencies according to an employer’s reasonable expectations.

“Different businesses have different interests to protect,” Still said.

Sales-related business are particularly sensitive to former employees sharing knowledge obtained with competitors. Another issue of major concern are customer lists.

“You may not can keep a guy from working, but he can’t legally share any information he’s got in his head,” said one local business owner. “It’s frustrating, but when it gets down to it, it’s your word against theirs.”

Still said a human resource manager often proves to be “invaluable” to a company regarding employee relations.

Discrimination claims against employers are increasingly common. They cover everything from civil rights discrimination and sexual harassment to racial harassment and gender discrimination that does not involve sexual harassment.

“The traditional understanding of sexual harassment is the quid pro quo situation where the employee receives a favorable employment situation in exchange for sexual favors,” Still said. “But more and more, you see claims simply based on an extremely sexually hostile environment. There may be no sexual activity whatsoever involved, but there may be hostility to a gender, usually a female. It’s more difficult to defend because there is such a wide array of circumstances in a working environment that an employee could perceive as hostile.”

And even if an employer is found not liable to such claims, he or she is prohibited from taking retaliatory action against the employee who made the harassment claim.

“The employee has the right to file a report,” Still said. “The employer is really left in a precarious position when that happens.”

The Equal Employment Opportunity Commission recently resolved a lawsuit against General Motors Corp. with a $1.25 million settlement to 16 workers at a New Jersey plant.

The suit alleged GM failed to provide a work environment free from sexual harassment and similarly failed to address incidents of racial harassment affecting African-American employees.

In addition, the EEOC charged that one employee was retaliated against when he supported another’s complaints to management about discriminatory treatment.

“The best advice is to have a human resource manager document, document, document every communication that occurs regarding a decision with an employee,” Still said.