The Government Accountability Project (GAP) and Zuckerman Law recently petitioned the U.S. Department of Labor (“DOL”) to issue rules and guidance prohibiting “de facto” gag clauses in settlement and severance agreements that dissuade whistleblowers from engaging in protected activities.

The DOL, which enforces more than 20 whistleblower protection laws across several industries, already requires agency approval of settlement agreements in whistleblower cases to protect against “gag provision[s] that restrict[ ] the complainant’s ability to participate in investigations or testify in proceedings relating to matters that arose during his or her employment.”  According to the Petition, while the DOL has curbed the use of clauses that expressly preclude a whistleblower from engaging in protected activity, “various forms of subtle gag provisions” have crept their way into settlement and severance agreements.

The Petition identifies such “de facto” clauses as: (i) “affirming that [the] employee has not engaged in confidential whistleblowing and requiring advanced notice of cooperation with government investigations”; (ii) “waiving the right to recover a whistleblower reward”; (iii) “overly broad confidentiality and non-disparagement clauses, often accompanied by penal liquidated damages provisions”; and (iv) “affirmations or attestations disclaiming knowledge of any violation of law committed by the employer.”

The Petition is just the latest call for government agencies to scrutinize contractual impediments to whistleblower complaints.  Indeed, in July 2014, Labaton Sucharow LLP and the GAP requested that the SEC “clarify and strengthen certain aspects of the SEC Whistleblower Program” by engaging in “appropriate rulemaking.”  Moreover, last week, the SEC announced that it issued a $130,000 fine against a company for a confidentiality agreement that, in the SEC’s view, could potentially chill an employee’s ability to communicate with the SEC about a potential securities violation.  The Financial Industry Regulatory Authority (FINRA) has taken a similar course of action in recent months, warning employers about agreements that may impede employees from blowing the whistle.

We will continue to monitor the status of the pending DOL petition and report back to our readers.  In the meantime, given the increased regulatory scrutiny of confidentiality provisions and agreements, employers should continue to review and, if necessary, adjust their policies and agreements to ensure compliance with applicable laws, rules, and guidance.