SEC Finds Certain Separation Agreement Provisions Unlawful Under Dodd-Frank Whistleblower Rule

The Security and Exchange Company, according to rule, 21F-17, says an employer cannot make and employee sign a waiver that forces them to waive their right to communication with or financial awards from the commission. Per recent case against BlueLinx Holdings, the SEC concluded that a company could not force an employee to choose between identifying themselves as a whistleblower and risking their severance pay and benefits.

Key Takeaways:

• Twice in the past two weeks, the Securities and Exchange Commission (“SEC” or “Commission”) issued a cease-and-desist order settling proceedings against companies for using confidentiality and waiver of claims provisions in employee separation.
• The SEC announced that it would be looking to bring enforcement actions with respect to severance agreements, confidentiality agreements, and employment agreements that violate Rule 21F-17.
• In addition, the SEC has signaled it will oppose attempts by employers to limit an employee’s right to receive whistleblower incentive awards.

“In connection with this well-publicized, targeted enforcement sweep, the SEC has become increasingly aggressive about confidentiality and waiver provisions in various types of employment-related agreements.”

http://www.natlawreview.com/article/sec-finds-certain-separation-agreement-provisions-unlawful-under-dodd-frank