SEC Cracks Down On those Who Would Silence Whistleblowers

The SEC recently took action against seven companies for violating whistleblower protections. The SEC’s whistleblower program is designed to protect employees and encourage them to report potential violations of securities laws. However, these companies included provisions in employment, separation, and other agreements that discouraged employees from reporting misconduct to the SEC. Some of these agreements required employees to waive their rights to financial rewards for whistleblowing, even though the agreements often stated that employees were still allowed to file complaints or participate in investigations. Probably buried within arbitration agreements.

The SEC saw these provisions as harmful because they discouraged whistleblowers from coming forward. By forcing employees to waive their right to a monetary reward for reporting wrongdoing, these companies created obstacles for employees who might otherwise report securities law violations. Even though there were no known cases where the companies enforced these provisions or employees refused to speak with the SEC, the existence of these clauses alone was enough for the SEC to take action. In total, the companies agreed to pay more than $3 million in civil penalties, update their agreements, and notify the employees affected.

One of the key reasons the SEC is so protective of whistleblower rights is that whistleblowers are vital to exposing corporate misconduct. The whistleblower program was established in 2010 as part of the Dodd-Frank Act to provide financial incentives to employees who report potential violations of securities laws. The SEC also adopted Rule 21F-17, which prohibits companies from taking any actions that might prevent individuals from reporting directly to the SEC.

One of the companies involved, Acadia Healthcare, faced the largest penalty of $1.386 million. Acadia’s agreements required employees to waive their rights to receive financial rewards for cooperating with government investigations, including SEC whistleblower programs. Though Acadia revised some of its agreements before being contacted by the SEC, the company still faced charges because its provisions created barriers for whistleblowers.

Other companies charged in the sweep include Smart for Life, IDEX, and TransUnion. Smart for Life was charged for including waivers of monetary damages in its agreements, despite allowing employees to file charges with government agencies. IDEX was similarly charged for requiring employees to waive their right to monetary awards while still permitting them to participate in whistleblower programs. Both companies, along with TransUnion, argued that their waiver provisions were limited by phrases like “to the fullest extent permitted by law,” but the SEC found this insufficient to protect whistleblower rights.

TransUnion also included problematic provisions in severance and transaction agreements with employees and independent contractors. Some of these agreements required contractors to notify the company of any legally compelled disclosures to government agencies, further impeding whistleblower efforts. TransUnion agreed to pay a $312,000 penalty.

In addition to Acadia, Smart for Life, IDEX, and TransUnion, other companies involved in the sweep were a.k.a. Brands Holding Corp., AppFolio, Inc., and LSB Industries. These companies paid penalties ranging from $19,500 to nearly $700,000.

This isn’t the first time the SEC has taken action to protect whistleblower rights. In 2015, the SEC brought its first enforcement action for overly restrictive confidentiality agreements. These agreements prohibited employees from discussing internal investigations with anyone outside the company, including the SEC. The SEC viewed this as a way to stifle whistleblowers and undermine the protections of the whistleblower program. A year later, in 2016, the SEC brought more charges against companies for severance agreements that included confidentiality restrictions and required employees to waive their rights to financial rewards for whistleblowing. The SEC has since pursued several cases, signaling its commitment to ensuring companies don’t use these types of provisions to silence employees.

The bottom line is that companies cannot put up roadblocks that make it harder for employees to report misconduct. The SEC’s whistleblower program is designed to protect employees from retaliation and offer them incentives to come forward. When companies try to limit employees’ ability to benefit from the program, it undercuts these protections. By enforcing these rules, the SEC is sending a clear message: whistleblowers are essential to market integrity, and any attempts to discourage them won’t be tolerated.

In a pro-employee stance, it's important to recognize how brave whistleblowers are for coming forward. They often put their careers on the line to expose wrongdoing, and they deserve protection and compensation for their efforts. These SEC actions reinforce that employees have the right to report misconduct without fear of losing out on financial rewards. If companies try to pressure you into giving up these rights, know that the SEC has your back, and those agreements can be challenged. Whistleblowers are crucial to holding companies accountable, and this sweep by the SEC ensures that companies can’t use fine print to silence them.

Supporting #BlackLivesMatter Not Protected under NLRA

On August 21, 2024, the NLRB ruled in *SFR, Inc. d/b/a Parkside Café* that employees who participated in Black Lives Matter protests outside of work were not "constructively discharged" when they resigned. The reason? The protests weren’t related to workplace issues or employee protections covered by the National Labor Relations Act (NLRA).

Here’s the background: some workers from Parkside Café joined BLM protests during their time off. The manager criticized them, linking pandemic-related closures to protests and suggesting a "protest tax." When told to resign if they kept attending demonstrations, three employees resigned, thinking they were fired. However, the NLRB ruled that while their protest activity was "concerted," it wasn't protected under the NLRA because it didn’t relate to workplace issues like discrimination in hiring. Simply put, the protests weren’t about improving working conditions at their café or other workplaces.

The takeaway for employees: while protest activities are sometimes protected, there must be a clear connection to workplace issues for NLRA protection. In this case, the Board said the protests didn’t meet that threshold.

Santa Barbara County Considering Raising Farmworker Wages

Farmworkers and advocates from the Alianza Campesina de la Costa Central urged the County Board of Supervisors to consider raising farmworker wages. They shared personal stories of financial hardship and asked for a $26 minimum wage to reflect the health risks and challenges faced by agricultural workers. Advocates argue this increase would lift families out of poverty, while representatives of growers expressed concern about potential job losses and economic impacts. Several board members were moved by the testimonies, with Supervisors Capps, Williams, and Hartmann showing support for further discussion on the issue. Learn more about unpaid wages, and farmworker rights. If you’re wondering about wrongful termination laws, or looking for a Central Coast Employment Lawyer, we can help.

History of Labor Day in the U.S.A.

The History of Labor Day: Honoring the American Workforce

Labor Day is one of those holidays that we all look forward to every year. It’s the unofficial end of summer, a chance to enjoy a long weekend, and for many, an opportunity to relax with family and friends. But beyond the barbecues, beach trips, and back-to-school sales, Labor Day has a rich history rooted in the struggle and achievements of American workers. Let’s take a closer look at the history of Labor Day and how it became a cornerstone of the American calendar.

The Origins of Labor Day

To understand the significance of Labor Day, we have to travel back to the late 19th century. This period was a transformative time in America, marked by rapid industrialization and economic growth. Factories, railroads, and mines were expanding, and millions of workers were pouring into cities to find jobs. However, this era, often called the Gilded Age, wasn't as glamorous as it sounds. The working conditions were tough, often unsafe, and workers faced long hours with minimal pay.

It was in this environment that the labor movement began to gain momentum. Workers began to organize and demand better wages, reasonable working hours, and safer conditions. Labor unions started forming, and strikes and protests became more common as workers fought for their rights.

The First Labor Day Parade

The first unofficial Labor Day was celebrated on September 5, 1882, in New York City. This event was organized by the Central Labor Union (CLU) to honor American workers and show solidarity among the various unions. Thousands of workers took unpaid leave to participate in a parade that started at City Hall and marched through the streets of Manhattan. The day ended with a massive picnic, complete with speeches, concerts, and even a bit of fireworks. It was a bold move and a powerful statement about the importance of labor to the American economy.

Following the success of the first parade, the CLU continued to celebrate Labor Day annually, and the idea started to catch on in other parts of the country. Oregon was the first state to officially recognize Labor Day in 1887, followed by a number of other states.

The Pullman Strike and the Federal Holiday

Labor Day's journey from a local celebration to a national holiday was accelerated by a tragic event known as the Pullman Strike of 1894. The Pullman Company, which manufactured railroad cars, had cut wages without reducing rent in the company-owned town where many of its workers lived. This led to a massive strike, which was soon joined by the American Railway Union (ARU). The strike spread quickly, disrupting rail traffic nationwide.

The situation escalated when the federal government, under President Grover Cleveland, intervened by sending troops to break up the strike, resulting in violent clashes and the deaths of several workers. The Pullman Strike highlighted the growing tensions between labor and management, as well as the government’s controversial role in these disputes.

In an attempt to appease the working class and repair the fractured relationship between the government and labor, President Cleveland and Congress moved quickly to make Labor Day a national holiday. On June 28, 1894, Congress passed an act making the first Monday in September of each year a legal holiday. The timing was no accident; it was an olive branch to American workers, symbolizing the government's recognition of their contributions and rights.

Labor Day in the 20th Century and Beyond

As the labor movement continued to grow and evolve, so did the meaning of Labor Day. Throughout the 20th century, labor unions played a crucial role in securing important rights for workers, such as the eight-hour workday, overtime pay, and safer working conditions. Labor Day became not just a day of celebration, but also a reminder of the ongoing struggle for workers' rights and a day to honor the contributions of unions.

During the Great Depression, the labor movement gained even more support, leading to significant reforms like the Fair Labor Standards Act of 1938, which established a national minimum wage and outlawed child labor. Labor Day became a time for union leaders, politicians, and workers to gather and discuss issues, celebrate victories, and plan for the future.

In recent decades, Labor Day has become more of a general celebration of the end of summer, but it remains a vital reminder of the power and importance of the labor movement in shaping modern American society. It’s a day to reflect on how far we’ve come and recognize the ongoing struggles that workers face in today’s economy.

The Modern Meaning of Labor Day

Today, Labor Day is a testament to the resilience and strength of American workers. It’s a reminder that the benefits many of us enjoy in the workplace—like weekends, health benefits, and safe working conditions—didn’t just happen. They were fought for by generations of workers who stood up for their rights and demanded fair treatment.

As we celebrate this Labor Day, let’s take a moment to honor those who came before us and paved the way for a better work environment. Let’s also recognize the ongoing efforts of workers, unions, and advocates who continue to fight for fair wages, equality, and safe workplaces.

So, while you’re enjoying that barbecue or hitting the beach this Labor Day weekend, take a moment to remember the true spirit of the holiday. It’s not just a day off—it’s a celebration of the hard work and dedication that have built this country and continue to drive it forward. Cheers to all the workers out there—past, present, and future! Happy Labor Day!

Don’t Sign Arbitration Agreements

Disney has withdrawn its request to settle a wrongful death lawsuit out of court, allowing the case to be heard by a jury. The lawsuit was filed by Jeffrey Piccolo, whose wife, Kanokporn Tangsuan, died after having an allergic reaction to food at Disney World. Disney initially argued that Piccolo had waived his right to sue by unknowingly signing an arbitration agreement while signing up for a Disney+ free trial, but faced backlash and dropped the claim.

First Post on New Employment Law Site: Bailey v. S.F. Dist. Attorney's Office

Bailey v. S.F. Dist. Attorney's Office (SC S265223 7/29/24)

Twanda Bailey sued the San Francisco District Attorney’s Office, former District Attorney George Gascon, and the City and County of San Francisco under the California Fair Employment and Housing Act (FEHA) for racial harassment and retaliation. Bailey, an African-American, claimed a coworker used a racial slur against her and that, after reporting it, the human resources manager obstructed her complaint and intimidated her. The trial court granted summary judgment for the City, but the California Supreme Court reversed this decision finding that a single slur could be actionable.