Companies have long used employee nondisclosure agreements to protect proprietary information. Now, regulators are trying to ensure that clauses in those agreements don’t also serve to inhibit whistleblowers from reporting potential corporate wrongdoing.
In recent months, the U.S. Securities and Exchange Commission has taken a number of actions against companies whose various employment contracts have language that might hold employees back from reporting misconduct to regulators. A watershed moment came in September, when the SEC fined hedge fund D.E. Shaw $10 million.