Employers may have received some assistance from the Occupational Safety and Health Administration (OSHA) in whistleblower and other retaliation cases. The agency recently issued new guidance that helps employers navigate the ever changing river of challenges to settlement agreements in whistleblower and other retaliation cases, whether based upon federal or state law (where state enforcement agencies are silent on the issue). Employers should review their settlement agreements, as well as their severance agreements, to ensure they are compliant with this new guidance as well as any recent directives from the National Labor Relations Board (NLRB) and/or state agencies.
OSHA reviews settlement agreements between complainants and their employers reached during the investigative stage of whistleblower actions to ensure they are fair, adequate, reasonable, and in the public interest, and that the employee's consent was knowing and voluntary. In reviewing these agreements, OSHA sometimes encounters provisions that it believes prohibit, restrict, or otherwise discourage a complainant from participating in protected activity related to matters that arose during his or her employment. In those cases, OSHA ensures that such clauses are removed or clarified so that the agreements are lawful and consistent with the underlying purposes of the whistleblower protection statutes.
On September 15, 2016, OSHA announced the publication of its new guidelines for approving these settlement agreements between employers and employees in whistleblower cases. The new guidance responds to a March 2015 petition for rulemaking from the Government Accountability Project. The stated purpose of the new guidelines is to ensure that settlements do not contain terms that could be interpreted to restrict future whistleblowing. The new guidelines supersede the guidance in Chapter 6, paragraphs XII.E.2 and 3 of the OSHA Whistleblower Investigations Manual, but does not otherwise change OSHA's policies with regard to review of settlements.
As stated in the guidance, OSHA will not approve a whistleblower settlement agreement that contains provisions that may discourage whistleblowing without outright prohibiting it, such as provisions that require employees to waive the right to receive a monetary award from a government-administered whistleblower award program for providing information to a government agency about violations of the law; and, provisions that require the employee to advise the employer before voluntarily communicating with the government or to affirm that the employee is not a whistleblower. OSHA also reserved the right not to approve settlements with liquidated damages provisions that it believes are excessive.
Specifically, the guidance provides that OSHA will not approve a settlement agreement that contains the following provisions:
A "gag" provision that prohibits, restricts, or otherwise discourages a complainant from participating in protected activity. (Protected activity includes, but is not limited to, filing a complaint with a government agency, participating in an investigation, testifying in proceedings, or otherwise providing information to the government. These constraints often arise from broad confidentiality or non-disparagement clauses, which complainants may interpret as restricting their ability to engage in protected activity.);
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 Sarbanes-Oxley Act, such as providing information to the Commission about a possible securities law violation. Other statutes that establish award programs for individuals who provide information directly to a government agency include the Commodity Exchange Act, 7 U.S.C. 26(b); Foreign Corrupt Practices Act, 15 U.S.C. 78u-6(b); Internal Revenue Act, 26 U.S.C. 7623(b); and the Motor Vehicle Safety Whistleblower Act, 49 U.S.C. 30172.);
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 the respondent to offset payments made to the complainant under the settlement agreement.).
With respect to liquidated damages clauses, OSHA reserves the right not to approve a settlement where the liquidated damages are clearly disproportionate to the anticipated loss to the respondent of a breach. OSHA may also consider whether the potential liquidated damages would exceed the relief provided to the complainant, or whether, owing to the complainant's position and/or wages, he or she would be unable to pay the proposed amount in the event of a breach.
When the above types of provisions are encountered, or settlements have broad confidentiality and non-disparagement clauses that apply "except as provided by law," employees may not understand their rights under the settlement. Accordingly, OSHA will ask parties to remove the offending provision(s) and/or add the following language prominently positioned within the settlement agreement:
"Nothing in this Agreement is intended to or shall prevent, impede or interfere with complainant's non-waivable right, without prior notice to Respondent, to provide information to the government, participate in investigations, file a complaint, testify in proceedings regarding Respondent's past or future conduct, or engage in any future activities protected under the whistleblower statutes administered by OSHA, or to receive and fully retain a monetary award from a government-administered whistleblower award program for providing information directly to a government agency."
For more information on employment related issues, please contact Joseph F. Spitzzeri at 312-984-6683 or [email protected].