The U.S. Securities and Exchange Commission has done a lot to increase the protections afforded to whistleblowers in the last several years. In 2015, the agency took several steps to further ensure whistleblowers are not prevented from coming forward and reporting incidents of wrongdoing within their organizations.
Since the enactment of the Dodd-Frank Act of 2010, the SEC has regularly instructed businesses across the nation to make sure there is no language in employee agreements that could somehow inhibit them from reporting any type of corporate misconduct happening in the workplace. In April 2015, the SEC went even further in removing these inhibitions, bringing the first-ever agency enforcement action based primarily on restrictive language in employee confidentiality agreements.
The case was against KBR, Inc., which agreed to pay a $130,000 fine and to revise all of its employee contracts to ensure employees are able to report corporate misconduct without having to first get approval and without being retaliated against.
Previously, KBR had required any witnesses in internal investigations to sign written statements containing language that threatened discipline against employees, including firing, if witnesses discussed issues with outside sources without receiving approval from the company. These agreements violated Rule 21F-17, which prevents companies from inhibiting employees from reporting wrongdoing. Although there was no evidence KBR ever actually did prevent an employee from reporting to the SEC, the fact that this language was in employee agreements was enough to issue sanctions against the corporation.
To that end, all businesses and organizations should review existing employment agreements to double check that they do not contain any language preventing employees to act as whistleblowers when they discover misconduct in the company.
For more information and guidance on creating sound compliant employment agreements, work with the trusted Dallas attorneys at Whistleblower Law for Managers.