Whistleblower Law - In the News

 

Lisa J. Banks
Partner
Katz, Marshall & Banks, LLP
Co-Author, Whistleblower Law: A Practitioner's Guide

The Defend Trade Secrets Act (DTSA), signed into law by President Obama in May 2016, is one of the most significant developments in whistleblower law in some time. Among other provisions, the DTSA provides immunity from liability for disclosing trade secrets to a government official or attorney for the purpose of reporting or investigating suspected illegal activity, as well as disclosures made in legal proceedings, so long as the disclosure is under seal. This protection extends to retaliation lawsuits.

In many ways, the Act’s whistleblower protections are modest. For instance, the DTSA immunizes a whistleblower who uses trade secret information “in the court proceeding” after the whistleblower “files a lawsuit [under seal] for retaliation.” But most federal whistleblower statutes require a whistleblower to first file an administrative complaint with the Department of Labor, and it is unclear whether disclosures made in such complaints would be immunized or even could be sealed. The Act may also encourage whistleblowers to file under seal more often than necessary out of concern that a court might determine that some piece of evidence underlying the complaint constituted a trade secret. Despite its potentially narrow scope, the DTSA undoubtedly provides significant protections not previously available for whistleblowers.

The DTSA is part of a broader trend in whistleblower law to deter companies from stifling employees’ ability to alert appropriate authorities on potentially unlawful activity. This trend was reflected in the SEC’s recent spate of enforcement actions – seven since August 2016 – against companies that used employment agreements to stifle current and former employees’ ability to report wrongdoing to the government. Similarly, OSHA announced in August 2016 that it would not approve of settlement agreements between whistleblowers and their employers that included confidentiality provisions that prohibited the whistleblower from providing information to the government. Elsewhere, the Department of Defense, NASA, and the General Services Administration issued a final rule in January 2017 prohibiting federal contractors from using agreements that restrict “the lawful reporting of waste, fraud, or abuse to a designated government representative authorized to receive such a report.”

These statutory and administrative efforts to preserve the ability of whistleblowers to report wrongdoing to the government, regardless of contractual provisions to the contrary, represent an important development in whistleblower law. While attorneys specializing in this area of law will be watching carefully to see whether these efforts continue under the new administration, protecting whistleblowers has long been a bipartisan issue. Powerful senators ranging from Charles Grassley (R-IA) to Patrick Leahy (D-VT), among many others, having expended considerable effort over the years to protect those who speak truth to power. The hope among whistleblower advocates is that this issue will continue to enjoy support from both sides of the aisle in the years to come.

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