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SEC Blasts Employee Confidentiality Agreements

November 7, 2016, Agenda

Barbara Hoffman and Lindsay Burke are quoted in an Agenda article regarding the SEC’s continued interest in restrictive confidentiality agreements that could deter employees from reporting company violations to authorities. 

According to Hoffman, the Occupational Safety and Health Administration administers a number of whistle-blowing programs for federal agencies, so it makes sense that it would be paying close attention to the SEC’s priorities in this area. “From my point of view, boards need to make sure that their companies integrate the HR functions sufficiently with their compliance functions,” Hoffman says. Similarly, compliance and HR should work together to ensure it is safe and easy for employees to report potential wrongdoing internally before going to an external agency, she adds.

Burke sees the regulators’ focus on confidentiality agreements as part of a broader issue: the tone at the top. Boards should be “leading the charge” in creating a culture of compliance and open communication, she says. “That’s what the SEC is most concerned about. The agreements they’ve taken issue with have not been shown to have actually impeded communications, but there is concern that they set a tone that people should not report any wrongdoing.”


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