OSHA Issues New Guidelines for Whistleblower Case Settlements

The Occupational Safety and Health Administration has published new guidelines for approving settlements between employers and employees in whistleblower cases to ensure that settlements do not contain terms that could be interpreted to restrict future whistleblowing. The guidelines, issued Sept. 9, 2016 make clear that OSHA will not approve a whistleblower settlement agreement that contains provisions that may discourage whistleblowing. OSHA enforces more than 20 federal whistleblowing statures, perhaps the most well-known are the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9610, Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 12 U.S.C. § 5567, and Sarbanes Oxley Act (SOX), 18 U.S.C.¹OSHA has jurisdiction over the whistleblower provisions of the following statutes: Occupational Safety and Health Act (OSHA 11(c) ), 29 U.S.C. § 660(c); Surface Transportation Assistance Act (STAA), 49 U.S.C. § 31105; Asbestos Hazard Emergency Response Act (AHERA), 15 U.S.C. § 2651; International Safe Container Act (ISCA), 46 U.S.C. § 80507; Safe Drinking Water Act (SDWA), 42 U.S.C. § 300j-9(i); Federal Water Pollution Control Act (FWPCA), 33 U.S.C. § 1367; Toxic Substances Control Act (TSCA), 15 U.S.C. § 2622; Solid Waste Disposal Act (SWDA), 42 U.S.C. § 6971; Clean Air Act (CAA), 42 U.S.C. § 7622; Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9610; Energy Reorganization Act (ERA), 42 U.S.C. § 5851; Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21), 49 U.S.C. § 42121; Sarbanes Oxley Act (SOX), 18 U.S.C. § 1514A; Pipeline Safety Improvement Act (PSIA), 49 ii U.S.C. § 60129; Federal Railroad Safety Act (FRSA), 49 U.S.C. § 20109; National Transit Systems Security Act (NTSSA), 6 U.S.C. § 1142; Consumer Product Safety Improvement Act (CPSIA), 15 U.S.C. § 2087; Affordable Care Act (ACA), 29 U.S.C. § 218C; Consumer Financial Protection Act of 2010 (CFPA), Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 12 U.S.C. § 5567; Seaman’s Protection Act, 46 U.S.C. § 2114 (SPA), as amended by Section 611 of the Coast Guard Authorization Act of 2010, P.L. 111-281; FDA Food Safety Modernization Act (FSMA), 21 U.S.C. § 399d; and Section 31307 of the Moving Ahead for Progress in the 21st Century Act (MAP- 21), 49 U.S.C. § 30171. 29 CFR Part 1977 – Discrimination Against Employees Exercising Rights under the Williams-Steiger Occupational Safety and Health Act; 29 CFR Part 1978 – Procedures for the Handling of Retaliation Complaints Under the Employee Protection Provision of the Surface Transportation Assistance Act of 1982 (STAA), as Amended; 29 CFR Part 1979 – Procedures for the Handling of Discrimination Complaints under Section 519 of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century; 29 CFR Part 1980 – Procedures for the Handling of Discrimination Complaints under Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002; 29 CFR Part 1981 – Procedures for the Handling of Discrimination Complaints under Section 6 of the Pipeline Safety Improvement Act of 2002; 29 CFR Part 24 – Final Rule, Procedures for the Handling of Retaliation Complaints under the Employee Protection Provisions of Six Federal Environmental Statutes and Section 211 of the Energy Reorganization Act of 1974, as amended; 29 CFR Part 1982 – Procedures for the Handling of Retaliation Complaints Under the National Transit Systems Security Act and the Federal Railroad Safety Act; 29 CFR Part 1983 – Procedures for the Handling of Retaliation Complaints under Section 219 of the Consumer Product Safety Improvement Act of 2008; 29 CFR 1984 – Procedures for the Handling of Retaliation Complaints Under Section 1558 of the Affordable Care Act; 29 CFR Part 1985 – Procedures for Handling Retaliation Complaints Under the Employee Protection Provision of the Consumer Financial Protection Act of 2010; 29 CFR Part 1986 – Procedures for the Handling of Retaliation Complaints Under the Employee Protection Provision of the Seaman’s Protection Act; 29 CFR 1987 – Procedures for Handling Retaliation Complaints Under Section 402 of the FDA Food Safety Modernization Act. Its publishes a Whistleblower Investigations Manual (OSHA Manual). While some of the statutes it enforces are limited to publicly trading companies, a number apply to private firms. This means its new guidelines have the potential to apply to all employers. Many lawyers believe that to be true.

A problem can arise in the standard employment contracts that have been developed the past 30 years or so by sharp lawyers representing employers. From many employer’s perspective, discoveries and revelations by whistleblowers are isolated errors that are “family business” and should be fixed internally and kept from the public. What employer wants to see its dirty linen blared in headlines in the press?  For that reason, protection is often built into their standard employment contract. Examples include: Employees cannot talk to the press, must report internally only, may not say anything negative about their employers (“non-disparagement clauses”) and use company lawyers when communicating with the government.

Procedurally, whistleblower complaints are often filed first with OSHA which investigates (usually only a little because it is understaffed) and then OSHA offers mediation (sometimes free through volunteers). Mediations often lead to settlements. OSHA must approve all settlement agreements. The new guidelines put in writing the policies that were previously enforced informally.

OSHA will not approve a term that prohibits, restricts, or otherwise discourages a complainant from participating in protected activity. “Protected activity” means things like filing a complaint with a government agency, participating in an investigation, testifying in proceedings, or otherwise providing information to the government.

OSHA gives the following examples of provisions it will not approve:

1. A provision that requires a complainant to notify (read must “internally report”) his or her employer before filing a complaint or voluntarily communicating with the government regarding the employer’s past or future conduct.
2. 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. Such requirements may compromise statutory and regulatory mechanisms for allowing individuals to provide information confidentially to the government, and thereby discourage complainants from engaging in protected activity.
3. 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. For example, OSHA will not approve a provision that requires a complainant to waive his or her right to receive a monetary award from the Securities and Exchange Commission, under Section 21F of the Securities Exchange Act, for providing information to the government related to a potential violation of securities laws. Such an award waiver may discourage a complainant from engaging in protected activity under the Sarbanes-Oxley Act, such as providing information to the Commission about a possible securities law violation. For the same reason, OSHA will also not approve a provision that requires a complainant to remit any portion of such an award to respondent. For example, OSHA will not approve a provision that requires a complainant to transfer award funds to respondent to offset payments made to the complainant under the settlement agreement.

If OSHA finds objectionable a provision in the employment contract or settlement it agreement, it requires it removed and the following language inserted:

“Nothing in this Agreement is intended to or shall prevent, impede or interfere with complainant’s non-waivable right, without prior notice to Respondent (the Employer), 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.”