SEC Cracks Down On Employment Agreements That Stifle Corporate Whistleblowers

On April 1, 2015, the Securities and Exchange Commission (“SEC”) gave a boost to corporate whistleblowers, reaching its first settlement with a company accused of stifling whistleblowing activity through the use of restrictive confidentiality agreements. In a statement announcing the settlement, the SEC issued a terse warning to all employers, cautioning them to “similarly review and amend existing and historical agreements that in word or effect stop their employees from reporting potential violations to the SEC.” The settlement is a reminder that employer agreements should be drafted carefully so they cannot be read as impeding an employee’s right to engage in statutorily protected whistleblower activity, or any protected activity.

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