A defense contractor has agreed to give up a long-standing policy that has intimidated potential whistleblowers, following a historic enforcement action by the Securities and Exchange Commission.
The SEC said that a company-imposed gag order used by KBR, Inc. could violate securities laws implemented through Dodd-Frank Wall Street reforms.
The first company punished under Dodd-Frank whistleblower protection rules, KBR had previously urged employees to sign confidentiality agreements during internal investigations into taxpayer waste and malfeasance. Under the terms of the agreement, workers would be fired if they were caught disclosing information to an outside entity.
As part of the settlement, KBR agreed to pay $130,000 to the SEC and clarified that non-disclosure agreements don’t apply to workers seeking to report legal matters to the SEC and other federal agencies.
The firm also agreed to reach out to employees who signed the NDA to inform them that they are protected in making disclosures to government agencies.
KBR is simultaneously busy dealing with a host of other legal matters. Lawsuits from a number of US troops who allege that toxic burn pits operated at KBR facilities in Iraq and Afghanistan caused them to contract cancer and neurological and respiratory diseases.
The company argued before the Supreme Court that as a military contractor operating in a theater of war, it deserves immunity from war injury claims, as the US government has it.
In January, however, the high court rejected KBR’s claims and sent the lawsuits back to lower courts for litigation.
