The Securities and Exchange Commission (SEC), the federal agency that has primary responsibility for enforcing the 2010 Dodd-Frank financial reform law, has fined BlueLinx Holdings, Inc., a small Georgia company, for including release language in its severance agreements that the SEC claims deterred employees from exercising their rights to qualify for whistleblower bounty hunter awards.
According to a “cease and desist” order agreed to by the company in BlueLinx Holdings, Inc., No. 3-17371 (Securities and Exchange Commission, August 10, 2016), the SEC claimed the release language used by BlueLinx required departing employees to waive the right to a monetary recovery as a result of filing a charge or complaint with a federal agency and violated SEC regulations by preventing departing employees from participating in the SEC’s whistleblower bounty hunter program. The company also agreed to pay a $265,000 fine.
The SEC’s decision to go after a company because of release language used in its severance agreements serves as a heads up to any company subject to the SEC’s jurisdiction that uses such releases to review them in the context of the SEC’s allegations.
A copy of the cease and desist order is available here.
Members of the Equal Employment Advisory Council (EEAC) can read more here.