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Sec Severance Agreement Language

Comment All publicly traded employers may wish to reconsider whether they should maintain the language of confidentiality and non-funding traditionally used in labour and dismissal agreements. Although some employers retain this language from a deterrent value (notwithstanding the SEC`s implementing measures), appropriate consideration should be given to weighing the advantages and disadvantages of the language used. Introduction Employers take note – the Security and Exchange Commission (SEC) has begun to target the routine language used in almost all employment agreements, severance pay and composition, with respect to an employee`s confidentiality and waiver of the right to participate in cash bonuses collected by a government agency. Examples of these clauses are as follows: in the second case, in late 2016, an oil and gas exploration company agreed to a $1.4 million transaction with the SEC. The SEC had indicted the company for violating Rule 21F-17 for the use of separation agreements with numerous restrictive covenants. First, the agreements contained a “future activities” clause stipulating that a former employee was not able to voluntarily contact or cooperate with a government agency in the event of complaints or investigations about the company. Second, the separation agreements contained a “confidential information” provision that required outgoing employees to agree “not to independently use the company`s confidential and protected information or to disclose it to other persons or entities, including government authorities, unless [the employee] had obtained the prior written consent of the company.” Third, the form separation agreements contained a clause entitled “Preservation of name and reputation”. This clause stated that at no time in the future may employees make defamation, denigration or derogatory remarks that could embarrass or harm the name and reputation of the company or any of its officers, employees or other designated parties, to any governmental or regulatory authority, to the press or to the media. With some 546 former employees who signed separation agreements with the company from 2011 to 2015, which included all or some of these provisions, the company agreed to pay a civil fine of $US 1.4 million. “No person can take steps to prevent a person from communicating directly with Commission staff about a possible breach of securities law, including the application or threat of a confidentiality agreement. with respect to such communications. The SEC continued its implementation trend in the first month of 2017 by announcing additional comparisons as part of enforcement measures to establish separation agreements that hinder whistleblowers. . .

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