Thanks to a recent enforcement action brought by the U.S. Securities and Exchange Commission (SEC), it may be time to review and revise the confidentiality provisions in employment agreements, severance agreements, employee handbooks, and other similar material.
As part of its regular compliance program, an employer routinely conducted internal investigations in response to allegations of potential illegal or unethical conduct. The SEC discovered that the employer conducted interviews with employees as part of the internal investigations and, in connection with the interviews, asked employees to sign form confidentiality agreements that: (i) prohibited the employee from discussing the interview without prior authorization from the legal department; and (ii) made it clear that unauthorized disclosures may result in disciplinary action, including termination of employment. The SEC determined that these confidentiality agreements violated whistleblower protections under federal securities laws and required the company to revise the confidentiality agreements as part of its settlement with the SEC to make it clear that nothing in the agreements would interfere with the employees’ ability to exercise their rights under whistleblower provisions of any federal law or regulations (what we’ll call a “whistleblower carve out”). Continue reading this entry