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SEC Addresses Whistleblower Protections in Company Settlement

Many people across the country do not fully understand what is meant by the term "whistleblower" in the employment law context.

Of course, it is widely known that blowing the whistle on something equates to alerting others of some violation or wrongdoing, that is, turning a spotlight on something nefarious and going public with revelations regarding its occurrence.

It is certainly not as widely appreciated across a wide swath of the public, though, how important state and federal regulatory authorities construe whistleblowing activities to be. Whistleblowers are often -- and rightfully so -- deemed to be courageous individuals who take material risks personally to alert the public to wrongful actions and fraudulent behavior. Without their willingness to step forward, wrongs can be perpetuated, such as compromised public safety in the workplace, environmental contamination, the defrauding of taxpayers and so forth.

And so regulators put great emphasis on protecting whistleblowers, knowing that doing so lessens the chance of employer retaliation and broadly promotes beneficial public objectives.

One recent SEC-related case bears this out. The matter related centrally to the severance agreements that one technology company forced its workers to sign as a condition of employment. Specifically, the work contracts mandated that employees leaving the company perpetually forgo engaging in any communication with regulators that disparaged the company.

When that prohibition came became known to the SEC, it instantly signaled a red flag, evidencing the company's intent to silence whistleblowing activities on the part of ex-workers.

And it could not be countenanced, given its chilling effect on would-be communications that could reasonably alert authorities to wrongful conduct. The SEC ruled that the employer violated federal securities laws. Pursuant to a settlement agreement inked with regulators, the company agreed to pay a substantial penalty, materially revise the language in its severance agreements and make reasonable efforts to locate former workers and duly inform them no contractual restrictions bar them from whistleblowing activities.

The right of workers in Connecticut and nationally to come forward with evidence of fraud is well recognized and safeguarded by state and federal laws. A proven employment law attorney can provide relevant information and, when necessary, diligent representation in a whistleblower case.

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