Through two recent Orders the Securities & Exchange Commission has gotten in on the act of narrowing the protections that employers can build into the release contained in a severance agreement.  The SEC has announced its intention to fight efforts of companies subject to its jurisdiction to limit the rights of departing employees in order to gain a severance payment.

The orders are a bit arcane, so we will just describe them in broad terms here.  In Blue Linx Holdings, Inc. the SEC considered the company's severance agreements in light of Dodd-Frank's Section 21F granting “whistleblower incentives and protection.”  The agency took aim at provisions that would have waived the employee's right to any monetary recovery from making a whistleblower complaint to the agency.  The Blue Linx case resolved with the entry of a cease and desist order and a $265,000 penalty.

In Health Net, Inc. a cease and desist order was entered because the company “directly targeted the SEC's whistleblower program by removing the critically important financial incentives that are intended to encourage persons to communicate directly with the Commission staff about possible securities law violations.”  A peanlty of $340,000 was also assessed.

These orders have not been subjected to court review.  However, they say much about the SEC's attitude towards enforcement of whistleblower protections. 

H/T Act Now Advisory