OSHA Prohibits Gag Clauses in Settlement Agreements
When a whistleblower retaliation case is resolved before OSHA, the agency will evaluate the proposed settlement to ensure that it does not impede or restrict the whistleblowers’ right to engage in certain forms of protected conduct, such as reporting fraud to the SEC.
OSHA’s Directorate of Whistleblower Protection Programs has issued 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 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.”
OSHA Guidance Barring Restrictions on Whistleblowing
OSHA’s policy guidelines on provisions in settlement agreements that restrict whistleblowing were promulgated in response to a petition for rulemaking submitted by whistleblower law firm Zuckerman Law and the Government Accountability Project. See Whistleblower Advocates Petition DOL to Combat Corporate Muzzling of Whistleblowers
Whistleblower Retaliation Lawyers
We have assembled a team of leading whistleblower lawyers to provide top-notch representation to Sarbanes-Oxley (SOX) whistleblowers. Recently Washingtonian magazine named two of our attorneys top whistleblower lawyers. U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 Law Firm in the Washington D.C. metropolitan area.
The whistleblower lawyers at Zuckerman Law have substantial experience litigating Sarbanes Oxley whistleblower retaliation claims and have achieved substantial recoveries for officers, executives, accountants, auditors, and other senior professionals. To schedule a free preliminary consultation, click here or call us at 202-262-8959.
Whistleblower Protections for SEC Whistleblowers
Waiver of Whistleblower Retaliation Claim Must be Knowing and Voluntary
“A promise is unenforceable if the interest in its enforcement is outweighed by a public policy harmed by enforcement of the agreement.” Town of Newton v. Rumery, 480 U.S. 386, 392 (1987). The ARB has consistently noted that the “purpose of the employee protections that the Labor Department administers is to encourage employees to freely report noncompliance with safety, environmental, or securities regulations and thus protect the public. Melton v. Yellow Transp., Inc., ARB No. 06–052, ALJ No. 2005– STA–2, slip. op. at 20 (ARB Sept. 30, 2008). The Secretary of Labor explained that:
“[p]rotected whistleblowing may expose not just private harms but health and safety hazards to the public, and the Secretary of Labor has been entrusted by Congress to represent the public interest in keeping channels of information open.” McClure v. Interstate Facilities, Inc., 92 WPC 2, D&O of SOL, at 3–4 (June 19, 1995); Beliveau v. Dept. of Labor, 170 F.3d 83, 88 (1st Cir. 1999).
Waivers of federal rights must be knowing and voluntary. Riley v. American Family Mutual Ins. Co., 881 F.2d 368, 371 (7th Cir. 1989). Under Seventh Circuit law, which governs this claim, “when an employee challenges his assent to a release as not being knowing and voluntary, a court must examine the ‘totality of the circumstances’
surrounding the execution of the release.” Pierce v. Atchison, Topeka and Santa Fe Railway Co., 65 F.3d 562, 571 (7th Cir. 1995).”
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