SEC SealThe Securities and Exchange Commission’s enforcement case against BlueLinx Holdings Inc. is an important reminder that companies should review their employment documents.

The Atlanta-based building products distributor Aug. 10 agreed to pay $265,000 to settle allegations that its severance agreements violated the agency’s whistle-blower protection rules.

Under the SEC’s whistle-blower reward program, companies can’t take any action to “impede” their employees from contacting the commission about possible securities violations. This includes “enforcing, or threatening to enforce” confidentiality agreements that may stop workers from approaching the agency.

According to the SEC, BlueLinx’s severance agreement asked workers to waive their rights to possible whistle-blower awards or lose post-employment benefits. Since at least 2011, about 178 BlueLinx employees signed the agreement, the SEC said.

SEC officials have long stressed that they’re on the lookout for company internal documents that violate whistle-blower protections. The SEC’s first anti-retaliation case involving corporate documents was against KBR Inc. In April 2015, the defense contractor was fined $130,000 for asking employees who internally reported potential problems to sign a confidentiality agreement. The agreement barred the workers from “discussing any particulars” about subsequent internal investigations taken by the company in connection with their complaints.

In addition to severance agreements, companies also should review their settlement agreements, executive agreements, intellectual property agreements, compliance policies, conflict-of-interest disclosure forms and affirmations, and even employee handbooks and codes of conduct.

In particular, companies should watch out for language that may limit workers’ ability to:

  • produce documents or communicate with government agencies, including the SEC;
  • consult with independent legal counsel; or
  • receive compensation or relief with respect to a complaint or claim to a government agency.

Companies also should be wary if their internal documents require employees to certify that they:

  • haven’t made a prior claim or complaint about the employer to a government agency;
  • haven’t shared confidential information with a third party, such as a government agency;
  • have reported all knowledge of workplace wrongdoing and will cooperate, going forward, with the employer on its investigation;
  • will promptly inform the employer of any knowledge of workplace wrongdoing;
  • will promptly notify the employer if contacted by a government agency with respect to the workplace;
  • will share information with a government agency only in response to an inquiry from the agency or a court order;
  • will share information with a government agency only after providing that same information to the employer; or
  • will continue to cooperate with their employer in any workplace investigation after they leave its employ.