David, Brody & Dondershine, LLP Experienced General Business Law Attorneys
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Reston, VA 20191

Whistleblower law compliance at issue in SEC settlement with VA company

Managing employment agreements is an important task for businesses, not only for the purpose of managing the business’ work force in daily matters, but also in terms of managing work force-related liabilities. Effectively managing employment agreements requires not only negotiation aimed at protecting the interest of the business and clear and unambiguous contractual language, but also compliance with employment law.

When a company utilizes employment agreements with terms which are illegal on their face or as applied to a given set of circumstances, the company can face liability which threatens both its financial stability and its public reputation. A recent example of this is a case involving Virginia-based tech company NeuStar Inc.

Yesterday, the company agreed to resolve allegations brought by the Securities and Exchange Commission that the company included terms in its severance agreements which violated protections for whistleblowers.

A variety of laws at both the federal and state level provide specific protections for workers who report violations. The available protections depend on the violation and the enforcement agency. The Securities and Exchange Commission has its own Office of the Whistleblower to handle such matters.

The employment agreements at issue in this case were alleged to have violated a federal rule forbidding agreements designed to prevent individuals from communicating with the commission concerning suspected securities violations. The language in question allegedly required former employers not to communicate with the SEC and other regulators about company misconduct.

In our next post, we’ll continue looking at how this case was resolved, and the importance of companies working with experienced legal counsel to manage liabilities in this area. 

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