Workplace Nondisclosure Agreements Seem to Violate Federal Whistleblower Laws

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Nondisclosure agreements are sometimes used in the workplace to protect sensitive information, but it appears that some companies have overly restrictive agreements that may violate federal whistleblower laws. The law protects whistleblowers, individuals who report wrongdoing, from retaliatory action. If the information leads to recovered funds, the whistleblower is entitled to a portion of those damages.

“It was a gag order,” said Donna Busche to The Washington Post. “The message was pretty clear: ‘Don’t say anything to anyone, or else.’ ”

Busche worked as the manager of environmental and nuclear safety at the Hanford waste treatment facility. She reluctantly signed a nondisclosure agreement with the U.S. Department of Energy in November 2012 that required employees to get approval from an agency supervisor before reporting wrongdoing at the country’s most contaminated facility. The agreement also barred employees from receiving financial compensation as a reward for the information, which appears to violate federal whistleblower laws.

After raising safety concerns, Busche was fired. URS, the company that terminated her employment, says that the firing was unrelated to her whistleblowing actions. In March, she and another employee testified before Congress at a hearing aimed at analyzing how whistleblowers were dealt with at Hanford.

In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act; through this, the Office of the Whistleblower at the SEC was established and a rewards program was created. In 2012, one of the largest whistleblower cases led to a $104 million reward for an American banker who reported that U.S. citizens were secretly depositing into a Swiss bank.

Legal experts say that the use of overly strict secrecy agreements is becoming increasingly common, The Washington Post reports. Traditional secrecy agreements protect proprietary information, but whistleblower lawyers say that the questionable agreements often have language that goes beyond that. Kellogg, Brown and Root, one of the largest defense contractors in the US, and the Arlington, Virginia nonprofit organization International Relief and Development are two companies that are being investigated for reportedly having their employees sign overly restrictive nondisclosure agreements. The Securities Exchange Commission is reviewing agreements at KBR and IRD is being investigated by the Special Inspector General for Afghanistan Reconstruction. Both companies have denied any wrongdoing. After The Washington Post reported on IRD, the company changed the wording in its agreements.

“I’m very concerned about these kinds of agreements,” said associate director of the Division of Enforcement at the SEC Stephen L. Cohen. “It is likely that a lot of people are not coming to us because of these agreements. Anything that inhibits a person’s desire to come forward to tell us about violations of the law is deeply troubling.”

Fear of retaliation for reporting wrongdoing in the workplace is becoming more of an issue, according to surveys of federal employees and workers on Wall Street. Currently, the Department of Veterans Affairs is at the forefront of a national controversy due to allegations of falsifying records about wait times for medical appointments. The U.S. Office of Special Counsel is looking into reports of retaliation by 37 VA workers who spoke up about alleged wrongdoing; some of them had reported about scheduling practices.