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What is a Confidentiality Agreement?

This is a clause that as number of insurance companies want my clients to sign as a part of a workers' compensation settlement. There are pluses and minuses to this clause but mostly minuses. Here are a few:

  • Insurance companies who insist on this clause as part of an overall workers' compensation settlement do not want the worker to talk about the settlement to any other worker still working at the company;
  • The insurance companies have no problem on their end remaining silent as to the terms of a settlement.
  • If the worker breaches the terms of a confidentiality agreement, the worker could be required to return the settlement funds;
  • If the terms of the confidentiality agreement require strict silence for years, this term could be unenforceable as too vague;
  • The worker may demand his/her right to speak publicly and freely after a settlement and may not want to agree to any confidentiality agreement whatsoever.

If my client is “dead set” against signing the settlement papers when it includes a confidentiality agreement clause, we have gone back to the insurance company and informed them that since this is the introduction of another term to the settlement agreement, we want more money to sign it. I have had mixed results with this tactic.

Even where settlements are confidential, parties will often agree that the term of settlement can be disclosed to accountants, financial advisors or other attorneys in allied matters in the future.

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