The CFPB warned on July 24, 2024, that confidentiality agreements that employees of a company are required to sign likely violate federal law if those agreements imply that employees could face retaliation from their employer or co-workers if they report what they perceive as unlawful behavior or wrongdoing at the company.

“If, due to a confidentiality agreement, an employee perceives that they could suffer adverse consequences for cooperating in such circumstances, then the CFPB’s ability to carry out its statutory functions to protect consumers is compromised,” the Bureau said, in a circular.

The CFPB added, “Confidentiality agreements that limit the ability of employees to communicate with government enforcement agencies or speak freely with investigators undermine the CFPB’s ability to enforce the law.”

The CFPB said that Section 1057 of the Consumer Financial Protection Act “(a) provides that “[n]o covered person or service provider shall terminate or in any other way discriminate against, or cause to be terminated or discriminated against, any covered employee or any authorized representative of covered employees” for: (1) providing or being about to provide information to the employer, the CFPB, or any other state, local, or federal government authority or law enforcement agency relating to a violation of, or any act or omission that the employee reasonably believes to be a violation of, a law subject to the CFPB’s jurisdiction or prescribed by the CFPB; (2)...

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