Employees Who File Wage/Hour Claims Can Disclose All Company Trade Secrets – Even Secrets Unrelated to the Claim — Without Fear of Being Fired

In Randolph v. ADT Security Services, Inc., the United States District Court for Maryland recently announced a broad ruling that an employee who attaches confidential and irrelevant documents to a complaint filed with a state agency alleging labor law violations cannot be penalized by the company for unreasonably disclosing company secrets.  The breadth of the court’s ruling is astounding.  Consider an employee of Coca-Cola who, along with a minimum wage complaint, attaches Coke’s secret formula.  Although the disclosure of Coca-Cola’s secret formula is incredibly damaging to the company and utterly irrelevant to the employee’s complaint, under the rule announced by the court the employee could not be penalized in any way for making the disclosure.

The case at issue before the federal district court was not as dramatic as the hypothetical above, but its consequences are nevertheless problematic.  The case concerned two sales representatives for a security company, ADT, who brought a lawsuit against ADT alleging that ADT violated the Fair Labor Standards Act (“FLSA”) by denying them promised bonuses, reducing their commissions based on customer cancellations, and for wrongfully terminating them for filing a complaint with the Maryland Department of Labor.  In particular, the plaintiffs claimed that after contacting the Maryland Department of Labor regarding their compensation concerns, they were instructed to complete and return a wage claim form along with supporting documentation.  The plaintiffs did so and attached numerous confidential documents, some of which contained personal information about ADT’s customers, including their alarm passwords and locations.  After receiving a copy of the complaint and seeing that the plaintiffs disclosed sensitive customer information, ADT terminated the plaintiffs.  The plaintiffs filed the lawsuit alleging that that they were fired for engaging in protected activity under the FLSA.

Both the employees and ADT argued that the court must consider the reasonableness of the disclosures in deciding whether the submission of the confidential documents was protected by the FLSA.  However, the court held that a rule of reasonableness does not apply when the disclosure of confidential documents by the employees done in the context of an FLSA complaint.  In other words, whether it was reasonable to disclose the confidential documents is irrelevant to determining whether the disclosure of the documents was protected by the FLSA.

While this ruling is troubling, it is especially surprising that the court reached this conclusion despite the agreement by both plaintiffs and defendant that reasonableness does matter when deciding whether disclosure of confidential documents in a wage-related complaint is protected activity under the FLSA.

The consequence of this decision is that an employee filing a wage-related complaint is privileged to fileany document along with the complaint without fear of employment termination.  The court went to great pains to show that this rule actually favored the defendant because, if documents are not revealed early, an investigation into the company’s employment practices would be more intrusive and costly than it needs to be.  Employers and innocent third parties who are now at risk of having valuable confidential information disclosed by disaffected employees will have to be forgiven if they are not as sanguine about the positive effects of the court’s ruling.