GOOGLE GOT SLAPPED – EMPLOYEE CONFIDENTIALITY AGREEMENTS ARE TOO BROAD AND EQUATE TO AN ILLEGAL NON-COMPETE

GOOGLE GOT SLAPPED –
EMPLOYEE CONFIDENTIALITY AGREEMENTS ARE TOO BROAD AND EQUATE TO AN ILLEGAL NON-COMPETE

High tech and entertainment companies in California are known for requiring that employees sign broad non-disclosure agreements or confidentiality agreements (“NDAs”).  A California judge ruled last week that the Google’s NDAs are too broad and break the state’s labor laws.  Google employee John Doe argued that the Google broad NDA barred him from speaking about his job to other potential employers, which gag-order amounted to a non-compete clause, which are illegal in California.

Google-type NDAs go far beyond preventing workers from talking to competitors about their job.  They apply broadly to prohibit employee from talking with anyone about their job, including, for instance, the press, other employees, employee’s family, and the employee’s healthcare (mental health or otherwise) caregivers, etc.

Employee advocates laud this as a victory to push tech and entertainment companies (and others) to do away with or at least narrow the issues covered by NDA policies that compel employees to disclose nothing about their job, even after they stop working at the company.  These types of NDA clauses cause new potential employers to be hesitant to hire an employee from a competitor for fear that the prior employer will sue the employee and new employer for some sort of NDA breach.  But, this ruling effectively invalidates “at will” agreements that function as de facto noncompete clauses.

While Google can still appeal this decision, California law is against NDAs that affect an employee’s ability to move between jobs.  The John Doe v Google case already had a twisted timeline.  John Doe’s claims were first rejected by the court under claims that federal law should govern, not state laws.  But the Court of Appeal reversed that ruling and sent the matter back to the state trial court, where last week’s ruling was issued.  The prior California Court of Appeal decision was based on a settled precept that a state’s labor laws can be more protective of employee rights than federal laws, including, for instance, free speech rights – i.e., the ability of an employee to talk with others about their job.

So, Google did not come to the Court table with clean forethought.  It had already gotten caught sending a companywide email threatening leakers who talked with reporters.  And an internal Google program called “Stop Leaks” was also exposed, where Google encouraged employees to report on suspected leakers.  Such a report could result in digital forensic investigations and termination of an employee.  Testimony of an investigator with the Stop Leaks team who was previously deposed offered one of the most detailed public descriptions of Stop Leaks, which was an internal team of “super sleuths” that “investigates every leak,” interviewing victims and witnesses, as well as the subject of the investigation.  The testimony was then that Stop Leaks included between eight and 13 investigators, managers, and analysts, who meet either monthly or biweekly to discuss investigations and use of digital forensics to review an employee’s search history, activity in Google Drive, downloads, emails to personal accounts, whether the employee has connected a USB drive to their computer, searches within Google’s intranet, and click-throughs.  When a leaker was found, the leaker was fired and per a senior VP of Google, employees were informed of what was leaked and the consequence (i.e., employee was fired), a form of threat in itself.

While Google had recently tried to soften its NDA to allow employees to discuss pay, wages and working conditions, claims about trying to keep employees from reporting illegal conduct or product defects to authorities remained and employees were skeptical.

An employer protecting confidential information, while balancing employee rights and advocacy is tough.  Here at Epps & Coulson, LLP we regularly deal with these types of employee issues.  Feel free to contact Dawn: dcoulson@eppscoulson.com

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is considered advertising under laws of some states.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.

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