Whistleblower Severance Agreement

“Financial incentives in the form of rewards for whistleblowers, as Congress has recognized, are an essential part of promoting whistleblowing to the commission,” said Antonia Chion, deputy director of the SEC`s law enforcement division. of the Commission. Hiring a labor attorney in New York to review your departure agreement is the best course of action. You will be able to make an informed decision about a termination agreement, rather than being under pressure. Companies cannot restrict your legal rights to prevent this review, and maintaining benefits in retaliation for requesting assistance may be countervailable. This makes legal representation in severance pay situations all the more important. In a separate development, the Trade Secrets Defense Act of 2016 (FSD) came into force on May 11, 2016. The DTSA strongly advises employers not to enforce a confidentiality agreement that prohibits an employee from sharing proprietary information with the government if the disclosure is related to the reporting of an alleged violation of the law. Many Qui Tam whistleblowers are asked to sign a departure agreement before leaving their jobs. A singing agreement is a contract between the employee and the employer. In most cases, each party agrees to give something to the other party.

Often, the employer offers to give the employee a lump sum, called severance pay. In return, the employee must sign a release. The lesson to be learned from these incidents is that termination agreements should be treated with caution. Familiarize yourself with general red flags, but also carefully check for questionable documents. Even if you really need full severance pay, never sign an agreement that makes you uncomfortable. Recently, the U.S. Securities Exchange Commission cracked down on employers and termination agreements that would restrict or hinder so-called “whistleblowers.” The primary basis for these challenges by the SEC is the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, in particular the amendment of the Securities Exchange Act of 1934 (“Exchange Act”) and the addition of Section 21F entitled “Whistleblower Incentives and Protection”. Savings clause for confidentiality provisions. The “savings clause” that BlueLinx sought to include in its severance agreements to remedy the SEC`s fees is required in its application more fully than Rule 21F-17. We also recommend the shorter version: after the law was passed, Health Net maintained severance agreements in which former employees waived their rights to receive whistleblowing incentives.

These agreements were drafted before the law was passed, but have never changed. Although Health Net later updated its agreements, it still paid a $340,000 fine in August 2016 after the SEC discovered the violation. . By including these clauses in its departure agreements, BlueLinx has increased barriers to its employees` participation in the SEC`s whistleblower program. By requiring outgoing employees to notify the company`s legal department before sharing financial or business information with third parties without expressly exempting the Commission from the scope of this restriction, BlueLinx forced those employees to identify themselves to the company as whistleblowers or potentially lose their severance pay and benefits. If you`re voluntarily resigning from a position or expecting to be fired, it`s probably time to exercise caution. Many employers offer severance pay with strict conditions. Some of them may even be illegal. These enforcement actions confirm that the SEC continues to focus on protecting whistleblower rights. Companies should review all forms of agreements with employees, including model agreements and releases, to ensure that the terms do not prohibit an employee from exercising legally protected whistleblowing rights, and should consider explicit exclusion to this effect. .