United States: A Primer On "Cross-Referencing" The DTSA Whistleblower Immunity Provision Following 4 Simple Steps

In the spring of 2016, the Defend Trade Secrets Act ("DTSA" or "Act") was signed into law providing trade secret owners for the first time a federal civil cause of action for trade secret misappropriation. Although the DTSA does not provide a new framework and largely overlaps with the Uniform Trade Secrets Act in that respect, it does have some unique provisions. One key distinction imbedded in the statute is that the Act requires employers to provide notice to employees of whistleblower immunities in all agreements dealing with trade secrets and/or confidential information in order to be able to recover punitive damages and attorneys' fees. Employers can do so by (1) providing notice in the agreement itself, or (2) "cross-referenc[ing]" a "policy document" that sets forth the employer's reporting policy for a suspected violation of law.

Unfortunately, the DTSA, like most new laws, stops there and does not provide employers with any guidance on the "policy document." What should the "policy document" say? Is it enough to simply "cross-reference" the policy in the agreement? Or should the employer provide the employee a physical copy of the policy along with the agreement? Unfortunately, the DTSA does not provide these answers.

What should the "policy document" say?

The DTSA does not give direction on what a "policy document" must say in order to satisfy the immunity notification requirement. Consequently, and not surprisingly, employers should follow best practices. First and foremost, there should be a general statement that the employer upholds the highest ethical standards and complies strictly with the law. It should create a "reporting responsibility" for employees to come forward with any suspected or known violations (because an employer can only act and take remedial action on known violations.) There must be a reporting procedure. It should be an open door policy that encourages reporting, and permits the violations to be reported confidentially and/or anonymously. Employers might consider including a 1-800 hotline, an e-mail address, a mailing address, or all of the above. There should be a "no retaliation" provision that expressly states that anyone who in "good faith" reports a violation or suspected violation of the law will not be subject to retaliation. Further, the policy should state that the company will subject to discipline any employee who does retaliate against someone who has reported a violation in good faith. The definition of "good faith" should be defined so the policy is not misused. Namely, unsubstantiated complaints made maliciously, with knowledge of their falsity, or without reasonable belief that the conduct constitutes a violation are not in good faith and should be subject to discipline. The policy should identify a compliance officer. This individual could be the company's general counsel and/or HR director. This person is responsible for ensuring that all complaints are investigated and resolved.  Finally, the company should include a statement that all reports are promptly investigated and appropriate corrective action will be taken if warranted by the investigation.

In addition, employers should might consider adding language concerning the DTSA's immunity notification provision, such as:

Employees may disclose trade secret information either (i) in confidence to a federal, state or local government official or to an attorney solely to report or investigate a suspected violation of law, or (ii) under seal in a complaint or other document filed in a lawsuit or other proceeding without fear of prosecution, liability or retaliation provided they do so in strict adherence with 18 U.S.C. §1833.

How should agreements reference the "policy document"?

Once the employer has a whistleblower policy in place that is updated and in compliance with the DTSA, it now must communicate this policy to its employees. How should this be done? Again, the DTSA is silent. No magic words are necessary, but the following language may suffice:

Notwithstanding any provisions in this agreement applicable to the unauthorized use or disclosure of trade secrets, you may be entitled to immunity from prosecution or civil liability for the disclosure of trade secrets or confidential information as set forth in Company's [NAME OF EMPLOYER'S WHISTLEBLOWER/REPORTING POLICY].

How should the "policy documents" be provided to employees?

Finally, the DTSA simply says that the "policy document" must be cross-referenced in the agreement, but it does not say whether the policy should be given to the employee or simply made accessible to the employee. Because the DTSA is a new statute, it is unclear whether courts will require simultaneous communication/delivery of the "policy document." In order to avoid the "I never got the policy" Defense, employers should institute procedures to ensure that employees receive the whistleblower policy contemporaneously with execution of the agreement by the employee. Obviously, the easiest way to do this is by providing an actual, physical copy of the whistleblower policy to the employee when the agreement is signed. Alternatively, employers can email the policy to employees to create a paper trail, or provide the employees with links to an internal intranet where the employee can review the policy. Employers may also require employees to sign certificates acknowledging receipt of the policy. If feasible, employers may wish to keep proof of delivery in employees' personnel files.

To summarize, if the employer chooses to cross-reference its whistleblower policy, to ensure compliance with the DTSA it should follow these 4 simple steps:

  1. Adopt a whistleblower policy. The policy should have certain provisions including general statements of company policy, a reporting procedure, a no retaliation policy, a definition of good faith, designation of a compliance officer, and a concluding statement that reports will be promptly investigated with corrective action taken if warranted. An even better policy will also include language address the DTSA's immunity notification provision
  2. Include language that cross-references the employers' whistleblower policy in agreements with employees.
  3. Provide actual notice of the immunity provision to the employee contemporaneous with signing the agreement, preferably by delivering a physical copy of the policy at the time the agreement is signed.
  4. Get proof of receipt of the policy with certificate(s) or acknowledgement(s) that are signed with each subsequent agreement. Retain and keep signed copies in the employees' personnel file.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions