• OSHA Issues New Policy Guidelines On Whistleblower Settlements
  • October 11, 2016
  • Law Firm: Shawe Rosenthal LLP - Baltimore Office
  • The Occupational Safety and Health Administration has issued an internal memorandum that sets forth guidelines for OSHA approval of settlements between employers and employees in whistleblower cases. In particular, OSHA states that settlement agreements may not discourage future whistleblowing activity.

    OSHA is the federal agency with enforcement authority over a multitude of whistleblower protection statutes. In addition to the Occupational Safety and Health Act, OSHA also enforces the whistleblower provisions of the Sarbanes-Oxley Act, the Affordable Care Act, the Consumer Financial Protection Act, and 17 other laws.

    The new settlement guidelines state that “OSHA will not approve a ‘gag’ provision that prohibits, restricts or otherwise discourages a complainant from participating in protected activity.” The guidelines go on to define “protected activity” as including “filing a complaint with a government agency, participating in an investigation, testifying in proceedings, or otherwise providing information to the government.”

    What Provisions Are Affected. OSHA notes that “gag” constraints are frequently found in confidentiality or non-disparagement clauses. It further identifies four other provisions that may contain such constraints:

    a. A provision that restricts the complainant's ability to provide information to the government, participate in investigations, file a complaint, or testify in proceedings based on an employer’s past or future conduct.
    b. A provision that requires a complainant to notify his or her employer before filing a complaint or voluntarily communicating with the government regarding the employer's past or future conduct.
    c. A provision that requires a complainant to affirm that he or she has not previously provided information to the government or engaged in other protected activity, or to disclaim any knowledge that the employer has violated the law.
    d. A provision that requires a complainant to waive his or her right to receive a monetary award (sometimes referred to in settlement agreements as a "reward") from a government-administered whistleblower award program for providing information to a government agency. OSHA will also not approve a provision that requires a complainant to remit any portion of such an award to the employer.

    What OSHA Will Do. The guidelines state that when the provisions identified above are found in a settlement agreement, OSHA will request the removal of such provisions and/or suggest that the following proposed language be included in a settlement agreement, in a prominent position:

    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.

    The guidelines also address settlement provisions concerning the payment of liquidated damages where one party breaches the terms of the settlement. OSHA states that it reserves the right not to approve a settlement containing such a provision if it deems the amount of liquidated damages to be disproportionate to the anticipated loss resulting from a breach. OSHA would also consider if the amount of liquidated damages exceeds what the complainant received in settlement monies, or if the complainant would not be able to pay liquidated damage due to his/her job position or wages.