OSHA’s Directorate of Whistleblower Protection Programs has issued new policy guidelines on provisions in settlement agreements that restrict whistleblowing. The policy guidance states that “OSHA will not approve a ‘gag’ provision that prohibits, restricts, or otherwise discourages a complainant from participating in protected activity,” and defines “protected activity” to include “filing a complaint with a government agency, participating in an investigation, testifying in proceedings, or otherwise providing information to the government.”
The new policy guidance clarifies that unlawful “gag clauses” encompass not only express prohibitions on providing information to government agencies, but also indirect restrictions on protected conduct that could dissuade whistleblowing, including broad confidentiality or non-disparagement clauses. In particular, the policy guidance, which will be added to OSHA’s Whistleblower Investigations Manual, identifies four types of settlement provisions that can constrain whistleblowing:
- “A provision that restricts the complainant’s ability to provide information to the government, participate in investigations, file a complaint, or testify in proceedings based on a respondent’s past or future conduct. For example, OSHA will not approve a provision that restricts a complainant’s right to provide information to the government related to an occupational injury or exposure.
- A provision that requires a complainant to notify his or her employer before filing a complaint or voluntarily communicating with the government regarding the employer’s past or future conduct.
- A provision that requires a complainant to affirm that he or she has not previously provided information to the government or engaged in other protected activity, or to disclaim any knowledge that the employer has violated the law. Such requirements may compromise statutory and regulatory mechanisms for allowing individuals to provide information confidentially to the government, and thereby discourage complainants from engaging in protected activity.
- A provision that requires a complainant to waive his or her right to receive a monetary award (sometimes referred to in settlement agreements as a “reward”) from a government-administered whistleblower award program for providing information to a government agency. For example, OSHA will not approve a provision that requires a complainant to waive his or her right to receive a monetary award from the Securities and Exchange Commission, under Section 21F of the Securities Exchange Act, for providing information to the government related to a potential violation of securities laws.[ ]Such an award waiver may discourage a complainant from engaging in protected activity under the SarbanesOxley Act, such as providing information to the Commission about a possible securities law violation. For the same reason, OSHA will also not approve a provision that requires a complainant to remit any portion of such an award to respondent. For example, OSHA will not approve a provision that requires a complainant to transfer award funds to respondent to offset payments made to the complainant under the settlement agreement.”
In addition, the policy guidance announces that OSHA reserves the right not to approve a settlement where the liquidated damages are clearly disproportionate to the anticipated loss to the respondent in the event of a breach.
OSHA issued this policy guidance in response to a petition for rulemaking submitted by the Government Accountability Project (“GAP”) and Zuckerman Law. GAP is a whistleblower protection and advocacy organization, and Zuckerman Law is a Washington DC law firm that represents whistleblowers nationwide.
Jason Zuckerman, Principal of Zuckerman Law, commends OSHA for taking a firm stand against contractual restrictions on whistleblowing: “De facto gag clauses undermine the operation and frustrate the intent of the whistleblower protection laws that DOL enforces by chilling or discouraging employees from disclosing to regulatory and enforcement agencies information about threats to public health and safety, financial fraud, consumer safety, food safety, nuclear safety, transportation safety, and other vital public concerns.”
OSHA’s policy guidance is consistent with the SEC’s recent enforcement actions against companies for using overly broad confidentiality provisions in severance agreements that would likely deter employees from blowing the whistle. For example, the SEC recently issued a cease-and-desist order against BlueLinx Holdings Inc. for requiring employees entering into severance agreements to waive the right to recover a whistleblower award and to notify the company’s legal counsel before disclosing information to government agencies pursuant to legal process. The SEC also required KBR to pay a $130,000 penalty for stipulating that witnesses in certain internal investigations sign confidentiality statements with language warning they could face disciplinary action, including termination of employment, if they discussed the subject of the interview with outside parties without the KBR legal department’s prior approval.