Florham Park partner Lynne Anderson was quoted in an HR Executive Online article titled, “Choosing Words Carefully.” The article discusses recent SEC enforcement actions challenging provisions in employee confidentiality and severance agreements that are deemed to “chill” employees from becoming whistleblowers, including provisions that require employees to waive the right to accept incentive awards under the SEC whistleblower program.
The enforcement actions are based on alleged violations of SEC Rule 21F-17 which “prohibit employers from taking measures through confidentiality, employment, severance, or other type of agreements that may silence potential whistleblowers before they can reach out to the SEC.” Lynne pointed out that the SEC enforcement activities "also targeted forfeiture of future recovery… they want to use financial incentives as part of their deputizing of employees for enforcement actions." The article discusses that The National Labor Relations Board, the Equal Employment Opportunity Commission, and the Occupational Safety and Health Administration also prohibit employers from interfering with employees’ ability to blow the whistle on activities that they believe are unlawful or illegal. “The EEOC has filed a number of enforcement actions relating to clauses in separation agreements, targeting things such as cooperation clauses and non-disparagement causes as well as nondisclosure clauses," Lynne said. Lynne also noted that confidentiality agreements must now be in compliance with the new Defend Trade Secrets Act.
Lynne also recommended that companies foster an open-door environment where employees feel comfortable raising concerns without fear of retaliation: "if there is something that needs to be addressed, companies want to address it preemptively and quickly rather than have it become a bigger issue and even possibly the subject of an enforcement action or a [Department of Justice] investigation.”