Keeping your handbooks, employment agreements, severance agreements and other documents current with laws and legal trends can seem like a lot of work. However, when you get caught on the wrong side of a legal dispute, hindsight says it was well worth the time.
The National Law Review recently published an article entitled “SEC Targets Severance Agreements that Impede Whistleblowers”. The article lists a number of companies the SEC went after because their severance agreements that employees signed had clauses that warned the employee would waive severance or other benefits if they engaged in the following types of activities against the company:
- Filing a complaint with the SEC
- Filing a complaint with a government agency
- Disclosing confidential information, except when disclosure is required by law, in response to a subpoena or with the company’s permission
- Relaying communication that disparaged, denigrated, maligned or impugned the company or its officers, directors or other associates
- Voluntarily communicating or contacting a government agency
SEC Settled with a Number of Companies
Between 2015 and 2016 and continuing into 2017, the SEC has settled with a number of companies. While names were withheld, examples of settlements included:
$130,000 owed in penalties and an agreement put in place to amend confidentiality statements stating that employees were allowed to report possible violations to the SEC and other government agencies
- $180,000 penalty
- $1.4 million penalty
- $340,000 owed in penalties and the implementation of a mandatory yearly training program to inform employees about their whistleblower rights
EEOC Targets Companies
The EEOC has also targeted companies with severance agreement clauses that interfere with the EEOC’s ability to investigate possible discrimination violations.
Get Legal Help with Revising Documentation
Private companies along with public companies are at risk for lawsuits if their legal documents contain clauses that impede employees in regards to reporting information to government agencies.
Stephen Hans & Associates assists small and medium sized business owners with regulatory and employment related concerns.