ATTORNEY NEWSLETTER
In the first-ever action against a company for stifling the whistleblower process, the Securities and Exchange Commission reached a settlement with Houston-based engineering and construction company KBR Inc.
The Securities and Exchange Commission alleged that KBR Inc. used restrictive employee agreements to prevent whistleblowers from taking action. According to the Securities and Exchange Commission, KBR required witnesses in internal investigations to sign confidentiality statements that could have kept them from reporting possible securities-law violations to outside authorities. Since the Dodd-Frank Act of 2010 that set up the SEC’s whistleblower program, the agency has made an effort to bring more whistleblower cases. Dodd-Frank whistleblower regulations prohibit companies from interfering with employees reporting potential securities-law violations to the agency, which is exactly what the agency alleged KBR Inc. was attempting to do with its employee confidentiality agreements.
The Securities and Exchange Commission and KBR agreed to settle for $130,000. As part of the agreement, KBR Inc. did not admit to any wrongdoing, but rather changed the language in their employee confidentiality agreements to allow employees to report potential violations to the Securities and Exchange Commission.
The Securities and Exchange Commission has a number of ongoing investigations regarding silencing whistleblowers, and has recently sent letters to several companies asking for years of nondisclosure agreements, employment contracts and other documents. The Securities and Exchange Commission first became aware of KBR’s restrictive employee confidentiality agreements as a result of a recent whistleblower lawsuit filed by a former KBR employee relating to the company’s contract work in Iraq, according to lawyer Stephen M. Kohn, who is representing the former employee.
The settlement is expected to have broad ramifications for how companies draft employee agreements. San Francisco securities fraud lawyers say that confidentiality agreements, and other employee agreements, can be important to make sure you are not limiting your rights to tell the government about wrongdoing – confidentiality and employment agreements must be drafted with caution in light of the recent SEC enforcement push and to protect worker’s rights to blow the whistle. They recommend telling the SEC about any overly restrictive/abusive confidentiality or employment agreements and not signing them.
Evans Law Firm, Inc. has offices throughout California and handles all types of whistleblower and qui tam/false claims cases, including IRS and SEC whistleblower claims. If you have a potential whistleblower claim, please contact Evans Law Firm, Inc. at 415-441-8669 or via email at info@evanslaw.com.
