Following the SEC’s lead, OSHA recently announced new guidelines that it will consider when deciding whether to approve settlement agreements reached during OSHA investigations of whistleblower claims.
As part of its administration of certain whistleblower protection statutes, the Occupational Safety and Health Administration (OSHA) is responsible for reviewing settlement agreements between complainants and employers reached during an investigation to ensure that the agreements are fair, adequate, reasonable, in the public interest, and voluntarily consented to. On September 15, OSHA announced new policy guidelines that provide enhanced scrutiny for terms that it views as restricting an individual’s right to engage in a certain protected activity, such as filing a complaint with a government agency, participating in a government investigation, or receiving an award under a government-sponsored whistleblower award program.
The catalyst for these changes is the perceived use of overbroad confidentiality or nondisparagement clauses that OSHA believes restrict or discourage an individual’s right to engage in a protected activity. To preserve these rights, OSHA enumerated the following categories of language that it deems to restrict protected activity:
- A provision that restricts an individual’s ability to provide information to the government, participate in investigations, file a complaint, or testify in proceedings relating to a respondent’s conduct
- A provision that requires an individual to notify his or her employer before filing a complaint or communicating with the government about the employer’s conduct
- A provision that requires an individual to affirm that he or she has not engaged in protected activity “or to disclaim any knowledge that the employer has violated the law”
- A provision that waives an individual’s right to receive a monetary award from a government-administered whistleblower award program for providing information to a government agency
In addition, OSHA will closely scrutinize provisions that impose liquidated damages for breaches of a settlement agreement for proportionality to the anticipated loss.
OSHA stated that when employees encounter provisions such as these, or where settlements have broad confidentiality or nondisparagement provisions that apply “except as provided by law,” employees may not understand their rights under the settlement.
Should OSHA find that an agreement violates these guidelines, the employer must remove the offending language and/or include the following language:
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.
Some OSHA regional offices already require that settlement agreements contain this or similar language, regardless of whether the agreements contain the offending language identified above.
The new OSHA guidelines follow regulatory enforcement actions brought by the US Securities and Exchange Commission (SEC) for overbroad confidentiality or release provisions. Although OSHA’s guidance will directly apply only to settlements of complaints reached during OSHA investigations, the guidelines may further shape other regulatory scrutiny of agreements and policies that regulators may perceive as restricting a protected right to communicate with government authorities or participate in a government-administered whistleblower award program.
Respondents in whistleblower investigations pending before OSHA should be mindful of the new guidance when considering settlements that OSHA will need to approve. More broadly, employers should review their agreements and policies in light of the latest regulatory scrutiny.