One of the most crucial parts of HR services is maintaining confidentiality throughout the company. This is one of the most significant elements that managers must take into account when doing things like responding to employee queries, processing complaints or even releasing new information about company products and services.

Understanding not just why confidentiality is important, but also its limits and the responsibilities associated with it, is a key part of proper HR management. Here are some basic facts about liability and employer responsibility.

What are you responsible for?
All companies, whether they’re multi-billion-dollar global entities or small 10-person community microbusinesses, are tasked with protecting sensitive data. In fact, some of the most essential information businesses must  keep secure is often employee or customer records, which can include things like Social Security numbers, performance review data and, in some cases, even customer credit card information.

But your responsibility to maintain confidentiality should face outward as well as inward. In addition to employee data, many companies have sensitive proprietary information, such as budget reports, new product notes and other data that could be detrimental to the business if leaked. Confidentiality within a company encompasses protecting both of these interests, personnel and corporate alike.

What are the limits of confidentiality?
As you may expect, it’s this second directive that companies most frequently rub up against when it comes to compliance in matters of confidentiality. One major instance can occur when a company is attempting to protect confidential information in the face of an official external government or industry investigation.

Human Resource Executive Online presented a recent example in which a Houston-based engineering firm required employees to sign a confidentiality agreement that prevents them from disclosing company information during internal-investigation interviews, under pain of potential termination. According to the source, the U.S. Securities and Exchange Commission, such a practice violates Rule 21F-17, which provides whistleblower protection in such circumstances.

“SEC rules prohibit employers from taking measures through confidentiality, employment, severance or other types of agreements that may silence potential whistleblowers before they can reach out to the SEC,” SEC Division of Enforcement director Andrew J. Ceresney stated.

Small-business owners are encouraged to work closely with PEO companies that can offer expert HR-related advice in issues of policy and compliance. While employing an in-house dedicated HR services team may be a financial strain on small businesses, HR outsourcing offers entrepreneurs access to essential services for a much lower cost.