Protecting alleged "whistleblowers" has become a greater and greater priority of government agencies in recent years. When agencies believe employers are taking actions that stifle the "whistleblowing" of employees, they are quick to take strong action. For the first time, an agency that gets plenty of attention from companies has joined in this effort.
The Securities and Exchange Commission (SEC) today issued an order in an administrative proceeding that found KBR, Inc. had violated SEC Rule 21F-17, which states: "No person may take any action to impede an individual from communicating directly with [the SEC] staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement ... with respect to such communications."—Rule 21F-17(a))
KBR has now amended its form confidentiality statement which the SEC found violated that Rule. Previously, it stated that witnesses were "prohibited from discussing any particulars regarding [business conduct interviews] and the subject matter discussed...unauthorized disclosure may be grounds for...termination of employment." KBR has to pay $130,000 in sanctions along with notifying its employees over the past 3 1/2 years that KBR does not require authorization to disclose information to the SEC and other agencies' Inspectors General.
According to the attached press release from the SEC: "Other employers should similarly review and amend existing and historical agreements that in word or effect stop their employees from reporting potential violations to the SEC." That is wise advice — unless you want to have the SEC investigating your business or you want to be a "test case" to challenge the SEC's action.
Read the press release issued by the SEC.
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