DOL Joins SEC In Attack On Severance Agreement Clauses

Companies cannot prohibit their former employees from collecting whistleblower awards, says the DOL in a recently released memo. Moreover, even asking employees to disclaim any knowledge of any legal violations by the employer is seen as potentially "discourag[ing]" employees from engaging in the protected activity of confidentially providing information to the government, according to the memo.

"No further recovery" clauses in severance agreements typically provide that the severance amount is the employee's complete recovery, and the employee will accept nothing more from any other source. These clauses, according to the DOL, need carve-outs that permit not only the reporting of suspected illegal activity to government agencies, but also permit the recovery of any whistleblower awards that result. The DOL notes that whistleblower awards are available under a variety of federal laws, including the Foreign Corrupt Practices Act, the Internal Revenue Act, the