Whistleblower Severance Agreement

Nothing in this agreement is intended to restrict or restrict the rights of staff to communicate with a government authority as intended, protected or justified by existing legislation. Other cases of severance pay for whistleblowers highlight other clauses that have been targeted by the SEC. In mid-2016, the SEC awarded a construction products company buyout agreements that required former employees to waive their monetary policy collection rights when they filed a complaint with the SEC or another government agency. The clause stipulated that the outgoing employee was required to waive any whistleblower bonuses or risk losing severance pay and other benefits after employment. The company did not admit any liability, but agreed to agree with the SEC on a $265,000 fine. In both cases, the SEC found violations as early as August 12, 2011, when Rule 21F-17 was adopted. The companies agreed to contact former employees who signed the contracts as of August 12, 2011 and provide them with certain information. The SEC has raised two specific concerns about the severance agreements at issue: severance agreements have long been used to find consensual – or at least mutually beneficial – solutions for an individual`s employment in a company. By definition, a redundancy agreement is a new agreement that differs from previous agreements between an employer and a worker, and the worker and employer must receive a benefit for the agreement to be enforceable. As a general rule, the worker receives long-term pay and benefits beyond the end of the employment, while the employer enjoys some sort of exemption from the worker`s potential rights, such as. B irregular dismissal or the right to additional payment. While these cases focus primarily on relatively unusual interference with the financial incentives discussed above, BlueLinx`s agreements also contained a more common provision that required employees to notify the company`s legal department if they felt they were legally or legally required to disclose confidential information. BlueLinx therefore raises the question of whether the SEC would argue that an explicit non-tender termination obligation for Daswhistleblowing is contrary to Rule 21F-17, even if it is concluded at a time when no investigation is underway or contemplated, and even if there are no provisions in the agreement directly designed to discourage the activities of the advisory giver.

It could reasonably be said that, without more, a general provision of secrecy, which was adopted at a time when there was no SEC investigation, could not be a measure taken to “prevent” whistleblowing activities. However, in future cases, there is a significant risk that the SEC will focus on the impact of such provisions, even if they serve a legitimate commercial purpose that has nothing to do with deterrence of whistleblowers. This is a common defence tactic used by companies that commit fraud against the government. If the company suspects that it has a whistleblower, the company may offer a severance package containing too broad a publication. Severance pay can be a cheap way to smother a case that tames in the egg. BlueLinx Holdings, Inc. committed the same offence.