Corporations Can No Longer Muzzle Whistleblowers

The Guardian published an Op-ED written by Kohn, Kohn & Colapinto partner, Stephen M. Kohn on Tuesday, April 7. The article discusses the use by corporations of restrictive non-disclosure agreements.

These agreements have long been used to silence whistleblowers. This practice was recently the subject of an enforcement action by the Securities and Exchange Commission against defense contractor KBR.

The SEC charged KBR with violating whistleblower protection rules enacted under the Dodd-Frank Act. KBR required witnesses in certain internal investigation 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. Since these investigations included allegations of possible securities law violations, the SEC found that these terms violated the Dodd-Frank Act, which prohibits companies from taking any action to impede whistleblowers from reporting possible securities violations to the SEC.

KBR agreed to pay a $130,000 penalty to settle the SEC’s charges and the company voluntarily amended its confidentiality statement by adding language making clear that employees are free to report possible violations to the SEC and other federal agencies without KBR approval or fear of retaliation.

Read Kohn’s Op-ED “Corporations cannot muzzle whistleblowers with secrecy agreements any longer.”S