SEC Aims to Ensure Whistleblowers are Uninhibited | Whistleblower Law for Managers

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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.

Agency comes down on employment agreements

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.

By Steve Kardell | Published March 28, 2016 | Posted in Whistleblower Litigation | Tagged Securities and Exchange Commission, whistleblower protection

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"Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission." -Richard Bowen, Citigroup Whistleblower
"Incredible knowledge of employee related concerns and equally brilliant knowledge of health care regulations, standards of practice. I would recommend this firm to anyone." -V.B.
"Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them." -KS
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