CFPB warns against censoring whistleblowers via broad NDAs

The Consumer Financial Protection Bureau (CFPB) is warning companies against intimidating potential whistleblowers by forcing them to sign broad nondisclosure agreements (NDAs) to deter misconduct from coming to light.

“Companies should not censor or muzzle employees through [NDAs] that deter whistleblowers from coming forward to law enforcement,” said Rohit Chopra, CFPB director, in a press release Wednesday.

In an accompanying circular, the CFPB said companies using NDAs or confidentiality agreements that forbid sharing information with third parties “to the extent permitted by law,” technically permits whistleblowing, but creates a chilling effect on employees who fear the consequences of violating NDAs.