On July 24, 2024, the Consumer Financial Protection Bureau (CFPB) issued guidance putting financial regulators and employers on notice that requiring employees to sign broad confidentiality or nondisclosure agreements that arguably deter employees from reporting alleged misconduct to federal watchdogs or from engaging in other whistleblower activity may violate federal whistleblower protections.

Quick Hits

• The CFPB published a circular warning employers that the use of broadly worded confidentiality and nondisclosure agreements carries the risk of violating federal whistleblower laws.
• The CFPB noted that confidentiality and nondisclosure agreements may have “legitimate purposes” but may also contain verbiage that unlawfully deters employees from reporting misconduct to authorities or cooperating with investigations.
• The CFPB is the latest federal agency to indicate concerns with confidentiality and nondisclosure agreements and whistleblower protections.

In a news release accompanying Consumer Financial Protection Circular 2024-04, the CFPB clarified its view that confidentiality agreements or restrictive covenants “may intimidate employees from disclosing misconduct or cooperating with investigations” and thereby “impede investigations and potentially violate federal whistleblower protections.”

The circular, which is meant to promote consistent enforcement of federal financial laws, comes as several federal agencies, including the U.S. Department of Justice (DOJ), the...

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