Restrictions in Severance Agreement Draw SEC Fire

The SEC imposed sanctions along with a cease-and-desist order on a company that included what the SEC considered unlawfully restrictive terms in its severance agreements. The offending document required employees to waive the right to a whistleblower award in connection with any complaint the employee filed with an administrative agency. The SEC also faulted the company for not specifically exempting the SEC from a provision requiring the employee to notify the company’s legal department before disclosing any financial or business information to third parties. The cease-and-desist order and $265,000 in sanctions were the result of a settlement between the SEC and BlueLinx,  a 1,700 employee building materials distributor based in Atlanta. A review of this case from Littler notes that the SEC’s order extends the analysis the agency adopted in a case it mounted against KBR, in connection with language in a confidentiality agreement that it required for employees who were interviewed as part of an internal investigation.