The Securities and Exchange Commission (SEC) recently brought its first enforcement action claiming that a company improperly restricted employees from participating in its whistleblowing program. KBR, Inc., a global engineering and construction services company based in Houston, 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. As a result of the enforcement action, SEC and KBR entered into a settlement following KBR's agreement to pay a $130,000 penalty and amend the confidentiality agreement at issue to allow employees to independently communicate with or provide information to enforcement agencies, such as the SEC.

"By requiring its employees and former employees to sign confidentiality agreements imposing pre-notification requirements before contacting the SEC, KBR potentially discouraged employees from reporting securities violations to us," stated Director of SEC’s Division of Enforcement Andrew Ceresney in an April 1, 2015, press release. "SEC rules prohibit employers from taking measures through confidentiality, employment, severance, or other type of agreements that may silence potential whistleblowers before they can reach out to the SEC. We will vigorously enforce this provision."

This decision is instructive for employers of all types who would be wise to review their existing employment-related agreements and policies to ensure they do not unintentionally restrict current or former employees’ ability to participate in the whistleblowing process, or any other investigative procedures conducted by federal or state employment agencies.