3 Examples Of Confidentiality And Its Limits

March 7, 2014 at 9:00 am Leave a comment

One of the trickiest questions facing businesses of all sizes, regulators, lawyers and policy makers is how to draw a line between encouraging the disclosure of information in an age when a smart phone gives an employee access to more information than imaginable just five years ago but the need for confidentiality is as important as ever. 

Example 1:  credit unions are justifiably concerned over NCUA’s decision to give the public access to a risk-based net worth calculator designed to give credit unions a snapshot of how they would fare under the agency’s proposed RBNW framework.  NCUA justifies its decision to make the calculator publicly available by stressing the need to have an informed public debate on this important issue. 

Given the agency’s steadfast commitment to public discourse, I find it odd that it takes the agency two weeks to make an online video of its monthly board meetings available.  If you want to take a look at NCUA’s February 20th board meeting, it is available now.  There are people like myself for whom real time access to NCUA’s decisions and explanations as to why they are making the proposals they are making would be invaluable. 

NCUA should take its commitment to openness to the next logical level and start offering real time broadcasts of its monthly meetings.  If the NCUA truly believes that the public deserves real time access to an individual credit union’s potential net worth then surely that same public deserves timely information about NCUA’s latest regulatory initiatives.

Example 2:  We’ve all been there.  You’re sitting around the dinner table talking to your wife about the day’s events when you realize that your kids are listening to your every word.  You explain to them that there is some stuff that just stays within the family.  Do you really think this warning works?  I once talked to a pre-school teacher who told me that she knows more intimate details about her school kids’ parents than she would ever want.  

Many of you have probably already heard about a recent case in Florida in which a father successfully sued his ex-employer claiming age discrimination.  As is common in these cases, $80,000 of the settlement was contingent on the father neither “directly or indirectly” disclosing the terms of the agreement to third parties.  No one bothered explaining this to the ex-employee’s 20-year old daugter, who proudly reported her father’s victory to her 1,200 Facebook friends, replete with the admonition that the ex-employer should “SUCK IT.”  What I didn’t realize until I read the case was that the court’s ruling ostensibly had nothing to do with the Facebook post.  The father violated the agreement as soon as he talked about the settlement with his daughter.  However, on a practical level it is doubtful that the father’s indiscretion would have cost him $80,000 in the pre-Facebook era.  As for the 20-year old daughter with 1,200 friends, perhaps they can offer her some extra summer jobs as she may very well be paying for her own college education from here on in.

Many of you have to sign off on confidentiality agreements either as part of your employment contracts or legal settlements.  This case underscores the importance of well-drafted confidentiality clauses in the age of social media.  Whereas contracts typically use somewhat generic language prohibiting both direct and indirect disclosures, I wouldn’t be surprised if lawyers start seeking greater flexibility on behalf of executives entering into contracts.

Example 3:  Merchants in Texas, Florida and California recently filed lawsuits to invalidate state level laws banning surcharges on credit card purchases.  A group of merchants already won a similar lawsuit invalidating New York’s credit card surcharge prohibition (518 NY General Business Law).  That case is currently being appealed. 

In the New York case, the plaintiffs successfully argued that the credit card surcharge prohibition violated their first amendment rights.

Entry filed under: Advocacy, Compliance, Legal Watch, Regulatory. Tags: , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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