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OSHA issues new guidelines for settlements in whistleblower cases

A new policy from the federal agency that oversees workplace safety will block settlement agreements that infringe on whistleblowing activities. (Thinkstock)

A new policy from the federal agency that oversees workplace safety will block settlement agreements that infringe on whistleblowing activities. (Thinkstock)

As non-disclosure agreements of various kinds become more prevalent in the workplace, one federal agency tasked with regulating workplaces is taking a stand to protect whistleblower activities.

New guidelines by the Occupational Safety and Health Administration seek to protect employees who report activities they see on the job by making sure subsequent settlement agreements are fair, reasonable and in the public’s interest, the agency says.

The federal agency reviews agreements between complainants and their employers reached during the investigative stage after a complaint is filed. In those agreements, OSHA often finds “gag” provisions that prohibit, restrict or in some way discourage the employee from engaging in a “protected activity” related to something that happened on the job.

A protected activity can be anything from filing a complaint against a government agency, participating in an investigation to testifying or giving information to the government in some capacity, OSHA said in a recent memo.

Under the new guidelines, OSHA will not approve any provisions in settlement agreements that restrict those activities.

The constraints are often a product of confidentiality or non-disparagement clauses, which are frequently becoming a part of employment contracts in many industries. In many cases, those provisions are so broad that complainants are led to believe that it bars them from engaging in whistleblower activities.

While the provision may restrict a complainant’s ability to report information to the government, it may also require a the person to notify his or her employer before filing a complaint, which in turn discourages the person from coming forward at all.

OSHA will also not approve provisions that require a complainant to disclose whether he or she has provided information to the government or participated in other protected activities in the past or disclaim any knowledge that the employer has broken the law, the agency said.

OSHA is also taking a stand against provisions that have become more frequent in whistleblower case settlements handled by the Securities and Exchange Commission that waive monetary awards. OSHA will not approve agreements that require a complainant to waive his or her right to a monetary award from a government-administered whistleblower program. In the case of the SEC, having a waiver provision may discourage a person from reporting a possible securities law violation.

Along the same lines, OSHA will not approve settlements with provisions that require the complainant to give a portion of their award to their employer to offset payments made in the settlement agreement, the agency said.

Another issue the agency often encounters in settlements is where the breaching party is required to pay liquidated damages. Under the new guidelines, OSHA reserves the right to not approve settlements where the liquidated damages are blatantly disproportionate to the anticipated loss to the opposing party.

To avoid barring employees from exercising their rights to engage in whistleblowing activities, OSHA will ask employers to prominently place language in the settlement that clarifies that nothing in the agreement prevents the complainant’s right to engage in acts covered by the whistleblower statute administered by the agency.

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