Breach of confidentiality clause;its consequenses

In a recent Florida case, the plaintiff lost $80,000 of settlement proceeds he had received on his employment discrimination claim after his daughter spilled the beans on Facebook. Breaching the confidentiality clause in a settlement agreement—and getting caught at it—is frighteningly easy in the age of social media.

As it was in the Florida case, many settlement agreements in wrongful termination cases include a confidentiality clause that prohibits the departing employee from disclosing the terms of the agreement.

To give teeth to the confidentiality clause, settlement agreements may provide for remedies if the employee discloses the existence or terms of the settlement agreement (and thus breaches the agreement), such as an agreement to pay certain liquidated damages and attorney fees or a portion of the settlement proceeds.

In the Florida case, as soon as the former employer learned of the disclosing Facebook post, it sued for breach of the agreement. After a trial court win for the employee, the appellate court reversed and required the employee to give back a portion of the settlement proceeds—$80,000—as per the settlement agreement.

As the Wall Street Journal blog reports, the employee explained that he and his wife thought they needed to let their daughter know that their dispute with his former employer had been put to rest. That may be understandable (although nonetheless a breach of the agreement), but the real problem, as the court said, is that the daughter “did precisely what the confidentiality agreement was designed to prevent.”

Clearly, there was a lack of judgment on the part of the father and daughter in the Florida case, greased by the ease of social media. But even when folks are trying to exercise discretion, it can be very difficult to clam up completely about a settlement. It makes it easier for both parties to uphold a confidentiality provision if it allows them to say something mutually agreeable, such as “the dispute was resolved on mutually agreeable terms,” or “the dispute was resolved to the mutual satisfaction of the parties” when they’re asked about the status or outcome of the lawsuit.

So, this is yet another instance in which social media impacts your legal practice. The next time you’re working with a client who is a party to a settlement agreement that contains a confidentiality clause, remember this cautionary tale of the father and daughter in Florida. Make sure that your client understands the importance of maintaining confidentiality and the risk of the settlement slipping through his or her fingers.