We spend a lot of time on this blog talking about discrimination. Sometimes, we talk about specifically about retaliation for complaining about illegal discrimination, which is itself illegal. But I want to talk today about a subset of retaliation that we haven’t talked about much on this blog: Retaliation against whistleblowers. Retaliation against whistleblowers is an issue that certainly affects both men and women in the workplace. In fact, when Time Magazine celebrated whistleblowers as their “Persons of the Year” in 2002, they featured three women who made waves as highly visible whistleblowers.
Generally, just as a company cannot retaliate against an employee for complaining about illegal discrimination, it also cannot retaliate against an employee who complains to the government about her employer’s illegal financial activity, including making false financial reports or defrauding the government. The most recent news about whistleblowers and retaliation comes from the Securities and Exchange Commission. The SEC, which regulates many aspects of the securities industry, recently brought charges against a company for requiring employees to sign a confidentiality agreement that could silence or chill whistleblower activities. This might sound like dry stuff, but I promise it matters. So bear with me.
Whistleblowers get awards out of any money they help the government collect—a finder’s fee of sorts (the largest of which was more than $30 million). Obviously, companies who are breaking the law don’t want to get caught, so some companies have tried to use confidentiality agreements to keep whistleblowers quiet—agreements that threaten employees with discipline or firing if they speak to government agencies about what the company views as confidential information. What the SEC said recently is that it is illegal for a company to try to prevent its employees from telling the government about securities law violations through the use of a confidentiality agreement. And the SEC has taken action against one company to show they mean what they say.
On April 1 of this year, the SEC announced that it had charged massive defense contractor KBR Inc. with “violating whistleblower protection” rules. According to the SEC, “KBR required witnesses in certain internal investigations interviews to sign confidentiality statements with language warning that they could face discipline and even be fired if they discussed the matters with outside parties without the prior approval of KBR’s legal department.” This looming specter of retaliation against whistleblowers prompted the SEC to take action.
In response, KBR has agreed to pay a $130,000 penalty and has amended its confidentiality policy to clarify that employees are free to report violations to the SEC and other federal agencies. Obviously, for a corporation like KBR, which reported revenue of approximately $1.4 billion in the fourth quarter of 2014, $130,000 isn’t exactly going to break the bank. But the punishment is an important symbolic gesture because it shows that the SEC will not tolerate employers’ attempts to use employment agreements to prevent employees from engaging in protected whistleblower activities.
Beyond the financial settlement, KBR also agreed to change its policy. KBR’s policy now includes the following language: “Nothing in this Confidentiality Statement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of the Law Department to make any such reports or disclosures, and I am not required to notify the company that I have made such reports or disclosures.”
This enforcement action is a step in the right direction because it gives employees greater comfort that the government is there to protect them if they speak up against employers who are breaking the law. So if you see your employer breaking the law, now you know they will think twice before they try to silence you or retaliate against you.