I am not making this up.

When you fire someone you should obtain a Severance Agreement in exchange for granting severance pay or other considerations not otherwise mandated. Standard language in such agreements seeks to assure the employer, providing separation benefits, that the recipient has not filed claims against the employer with a government agency.

The SEC has a robust business in receiving information concerning corporate malfeasance and actually paying money to the person providing such information as the SEC finds actionable within its area (and anything significantly wrong and not disclosed where company shares are held publicly is likely a violation of SEC disclosure regulations).  And who is a better source of information of wrongdoing as an employee whose sense of company loyalty evaporates while being fired?

Language in separation agreements for public companies (and per one SEC regional director, also private companies) needs to be reconsidered in light of the SEC position.  Surely there is value to an employer to learn that a fired (or departing) employee has not filed a claim with a government agency, but: what if other agencies take the same  (SEC)  position; and today, if the separation agreement expressly must state “You need not tell me if you have filed a complaint with the SEC that may result in your receiving money as a whistleblower”– sort of feels like a hint or an invitation, doesn’t it.

Those of us who follow the SEC must confess that the whistleblower program has uncovered very very many illegal practices, to the material benefit of the integrity of the securities markets and the honest conduct of our country’s businesses.  Don’t assume that either the whistleblower program, or the SEC’s position on severance contracts, is going to disappear.

I need here to reiterate that whatever appears in my blog posts are my views, not necessarily the view of my law firm, and are NOT legal advice.  Talk to your lawyer.