January 28, 2022

Volume XII, Number 28

Advertisement
Advertisement

January 27, 2022

Subscribe to Latest Legal News and Analysis

January 26, 2022

Subscribe to Latest Legal News and Analysis

January 25, 2022

Subscribe to Latest Legal News and Analysis
Advertisement

Petition Urges DOL To Target Contractual Clauses Discouraging Whistleblowing

The Government Accountability Project (GAP) and Zuckerman Law recently petitioned the U.S. Department of Labor (“DOL”) to issue rules and guidance prohibiting “de facto” gag clauses in settlement and severance agreements that dissuade whistleblowers from engaging in protected activities.

The DOL, which enforces more than 20 whistleblower protection laws across several industries, already requires agency approval of settlement agreements in whistleblower cases to protect against “gag provision[s] that restrict[ ] the complainant’s ability to participate in investigations or testify in proceedings relating to matters that arose during his or her employment.”  According to the Petition, while the DOL has curbed the use of clauses that expressly preclude a whistleblower from engaging in protected activity, “various forms of subtle gag provisions” have crept their way into settlement and severance agreements.

The Petition identifies such “de facto” clauses as: (i) “affirming that [the] employee has not engaged in confidential whistleblowing and requiring advanced notice of cooperation with government investigations”; (ii) “waiving the right to recover a whistleblower reward”; (iii) “overly broad confidentiality and non-disparagement clauses, often accompanied by penal liquidated damages provisions”; and (iv) “affirmations or attestations disclaiming knowledge of any violation of law committed by the employer.”

The Petition is just the latest call for government agencies to scrutinize contractual impediments to whistleblower complaints.  Indeed, in July 2014, Labaton Sucharow LLP and the GAP requested that the SEC “clarify and strengthen certain aspects of the SEC Whistleblower Program” by engaging in “appropriate rulemaking.”  Moreover, last week, the SEC announced that it issued a $130,000 fine against a company for a confidentiality agreement that, in the SEC’s view, could potentially chill an employee’s ability to communicate with the SEC about a potential securities violation.  The Financial Industry Regulatory Authority (FINRA) has taken a similar course of action in recent months, warning employers about agreements that may impede employees from blowing the whistle.

We will continue to monitor the status of the pending DOL petition and report back to our readers.  In the meantime, given the increased regulatory scrutiny of confidentiality provisions and agreements, employers should continue to review and, if necessary, adjust their policies and agreements to ensure compliance with applicable laws, rules, and guidance.

© 2022 Proskauer Rose LLP. National Law Review, Volume V, Number 100
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Lloyd B Chinn, Financial, Whistleblower Attorney, Proskauer Law Firm
Partner

Lloyd B. Chinn is a Partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd's practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media,...

212-969-3341
Daniel L Saperstein, Proskauer Law Firm, Labor Employment Attorney
Associate

Daniel L. Saperstein is an Associate in the Labor & Employment Law Department, resident in the Newark office. He is a member of the Employment Litigation & Arbitration, Labor-Management Relations, Employment Law Counseling & Training, International Labor & Employment, and Whistleblower & Retaliation Groups, as well as the Dodd-Frank Task Force.

973-274-3272
Advertisement
Advertisement
Advertisement