Recent enforcement actions by the U.S. Securities and Exchange Commission are making companies rethink the terms of severance agreements they provide to departing employees.
The actions concerned fairly commonplace clauses that prohibit former employees from seeking monetary awards for whistleblowing or providing information about potential securities laws violations to the SEC.
Many companies rely on similar language and will have to rethink how they structure agreements, according to Adam Saravay, an attorney in the Newark, N.J., office of McCarter & English.
“Most companies will probably decide to take the conservative approach and conform their agreements to the SEC’s position,” he said.