A recent decision from the Florida Third District Court of Appeal provides some valuable guidance for Canadian employers wishing to keep settlement agreements strictly confidential. Patrick Snay (Snay) had settled an age discrimination lawsuit with his former employer Gulliver Preparatory School (the School). The School agreed to pay him $80,000, but the settlement agreement contained the following confidentiality clause:
…Confidentiality…[T]he plaintiff shall not either directly or indirectly, disclose, discuss or communicate to any entity or person, except his attorneys or other professional advisors or spouse any information whatsoever regarding the existence or terms of this Agreement…A breach…will result in disgorgement of the Plaintiffs portion of the settlement Payments.
Snay was probably happy with the settlement and thinking about ways to spend the $80,000. Perhaps some of it was even earmarked for his daughter’s college fund. Unfortunately his daughter had other plans. Before he received the $80,000, and in breach of the confidentiality clause, Snay told his daughter about the settlement. She then immediately posted to her roughly 1,200 Facebook friends:
Mama and Papa Snay won the case against Gulliver…Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.
The School found out about the Facebook boast and was obviously displeased. It refused to pay Snay any of the $80,000. The Florida Appeals Court ruled that it was justified in doing so, stating:
Snay violated the agreement by doing exactly what he had promised not to…His daughter then did precisely what the confidentiality agreement was designed to prevent.
Faced with the same situation, a Canadian court might not reach the same conclusion, as the result is an obviously harsh outcome for Snay – a man who claimed that he was subjected to age discrimination. As an example, a recent human rights decision involving breach of a confidentiality clause resulted in the Human Rights Tribunal of Ontario only reducing the settlement amount owed. However, Canadian employers should keep in mind these valuable lessons:
- As a general rule, Canadian courts will enforce reasonable and clear contractual provisions entered into between parties. This includes confidentiality provisions.
- If an employer wants to keep the settlement confidential, it should include a confidentiality clause in the settlement agreement, barring any disclosure of the settlement and the discussions leading up to the settlement.
- The confidentiality clause should clearly state who the other party can disclose the settlement to, if anyone. Financial and legal advisors are usually allowed. Sometimes, immediate family members such as spouses are also permitted.
- If the confidentiality clause allows disclosure to advisors or family members, include a statement that this is on the condition that those advisors or family members maintain confidentiality and that the other party is responsible for any further disclosure by those advisors or family members.
- Consider including a statement that any breach of the confidentiality clause will result in the other party being required to return the settlement funds that they have received.
- Consider specifically defining certain types of disclosures that are not allowed, such as postings on blogs and other social media sites.