DOJ and OSHA Target NDAs that Undermine Whistleblower Protection Laws

On January 14, 2025, the Department of Justice Antitrust Division (the “Division”) and the Department of Labor Occupational Safety and Health Administration (“OSHA”) issued a joint press release calling attention to corporate non-disclosure agreements (“NDAs”) that deter individuals from reporting potential antitrust crimes.  Employers who use NDAs that potentially impede whistleblowing could be penalized when the Antitrust Division makes charging decisions and sentencing recommendations, and considers leniency applications. Employers could also be subject to criminal charges if the NDA is used to obstruct an investigation. The announcement reflects a broader initiative by the Department of Justice (“DOJ”) and other federal agencies to crack down on the suppression of whistleblower protections and strengthen whistleblower programs in an effort to incentivize reporting of corporate wrongdoing.

I. New Federal Antitrust Guidance on NDAs and Whistleblower Protections

The January 14 press release focuses on NDA provisions that could undermine the Criminal Antitrust Anti-Retaliation Act of 2019 (“CAARA”) and impede employees’ rights to report potential antitrust violations.

Under CAARA, employers are prohibited from retaliating against or discharging employees who (1) report potential antitrust violations and related crimes either to their employer or to the federal government, or who (2) assist in a federal investigation or proceeding.² According to the Division, “even the mere implication that an NDA would bar employees from reporting illegal conduct or assisting an investigation or proceeding clashes with the basic principles behind CAARA”³ and impedes whistleblower protections.

When assessing the effectiveness of a company’s compliance program, the Division will consider NDAs and any other relevant contractual restrictions and anti-retaliation training. Contractual provisions that interfere with or “chill” employees’ reporting rights will have negative consequences for employers when the Division makes charging decisions and sentencing recommendations. Additionally, contractual provisions that obstruct or impede an investigation may constitute separate federal criminal violations.⁴ Similarly, provisions that interfere with employee cooperation with federal government investigations can also jeopardize an employer’s ability to fulfill its obligations under the Antitrust Division’s leniency policy.⁵

II. Broader Effort to Encourage and Protect Whistleblowers

DOJ

The January 14 press release is part of a broader DOJ initiative to encourage corporate whistleblowers and ensure their protection. Over the last year, DOJ has implemented several new programs and policies:

Corporate Whistleblower Awards Pilot Program: The Corporate Whistleblower Awards Pilot Program incentivizes individuals to disclose corporate or financial misconduct by providing financial rewards to eligible whistleblowers.⁶ The pilot program explicitly identifies four areas not previously covered by a federal whistleblower program:

• Foreign corruption and bribery;
• Financial institution-related crimes;
• Corruption involving US public officials; and
• Health care fraud.⁷

Although the program highlights the above four areas, Nicole M. Argentieri, the former Principal Deputy Assistant Attorney General for DOJ’s Criminal Division, stated at the September 23, 2024 Society of Corporate Compliance and Ethics 23rd Annual Compliance & Ethics Institute that “if a whistleblower has information about misconduct that is not covered by an existing whistleblower program but does not fall within one of these four categories, we want to hear from them.”⁸

Eligible whistleblowers who voluntarily disclose original information leading to successful forfeitures exceeding $1,000,000 may receive up to 30% of the first $100 million in net proceeds forfeited and up to 5% of any net proceeds forfeited between $100 million and $500 million.⁹ The program imposes an obligation on corporate compliance departments to “implement and provide training on policies that incentivize” both reporting misconduct and protecting employees who report misconduct.¹⁰ The program provides for potential penalties for companies that retaliate against whistleblowers, including revocation of credit earned by a company’s cooperation and remediation, potential sentencing enhancements, and/or prosecution for obstruction of justice.¹¹

Corporate Enforcement and Voluntary Self-Disclosure Policy: This policy outlines the factors the DOJ considers in criminal cases against companies. Amended in August 2024, this policy is a presumptive declination for companies that report alleged misconduct within 120 days of a whistleblower complaint, provide full cooperation, and remediate.¹²

Revised Antitrust ECCP Guidance: The Evaluation of Corporate Compliance Programs (“ECCP”) sets forth the principles that prosecutors use to evaluate companies’ compliance programs when assessing the charges, sentencing, or penalties a company might face in resolving a criminal investigation.¹³ Following DOJ’s update to its ECCP¹⁴ —which provides that prosecutors should “assess the effectiveness of a company’s reporting mechanism, including whether a company encourages and incentivizes its employees to report misconduct or discourages such reporting”¹⁵ —the Division released its revised antitrust-specific guidance (the “Revised Antitrust ECCP”).¹⁶ The Revised Antitrust ECCP provides further guidance on how the Division will evaluate whistleblower protections in the context of antitrust enforcement, including by emphasizing the importance of a company’s:

• Confidential internal reporting mechanisms;
• Comprehensive anti-retaliation training and CAARA protections;
• NDAs free of restrictive or chilling language;
• Policies ensuring employees can report antitrust violations both internally and to the government.¹⁷

US Attorney’s Offices: On a local level, the US Attorney’s Office for the Central District of California and the Southern District of New York, among others, have announced their own whistleblower policies to further incentivize the reporting of corporate wrongdoing.

Other Federal Agencies

Commodity Futures and Trading Commission: In June 2024, in a first of its kind enforcement action, the Commodity Futures Trading Commission (“CFTC”) required a company to pay a $55 million civil monetary penalty for violations, including impeding reporting by a whistleblower.¹⁸According to the order, the company required its employees to sign employment agreements and requested that former employees sign separation agreements containing non-disclosure provisions prohibiting them from disclosing company information, with no exception for law enforcement agencies or regulators, which illegally impeded individuals from voluntarily communicating with Division of Enforcement (“DOE”) staff during the investigation.¹⁹

Securities and Exchange Commission: In September 2024, the Securities and Exchange Commission (“SEC”) announced that seven public companies collectively paid more than $3 million to settlements for violating Rule 21F-17(a).²⁰ That rule prohibits impeding an individual from communicating directly with the SEC about potential securities law violations. In those cases, the relevant agreements included employee waivers of their right to possible whistleblower monetary awards. Despite no action by the companies to enforce these provisions, the SEC found the provisions created impediments to participation in the Commission’s whistleblower program.²¹

Financial Crimes Enforcement Network: The Financial Crimes Enforcement Network (“FinCEN”) has similarly advanced its whistleblower program which largely tracks the parameters of the SEC’s whistleblower program.²²

National Highway Traffic Safety Administration (NHTSA): In December 2024, after considering public comments, the National Highway Traffic Safety Administration (“NHTSA”) finalized the new Implementing the Whistleblower Provisions of the Vehicle Safety Act rule, which formalized its whistleblower award program.²³

III. Key Takeaways

The DOJ’s January 14 press release highlights the importance of ensuring that companies have robust, up-to-date internal reporting mechanisms, anti-retaliation policies, and policies and agreements that do not “chill” reporting of potential corporate wrongdoing either internally or to regulators. Given the increasing focus on whistleblower protections across federal agencies, companies should

• Review compliance programs, policies, and contractual language to ensure compliance with whistleblower protections;
• Incorporate explicit statements in contracts (including NDAs, employment, settlement, and separation agreements) affirming that the company does not prohibit reporting of criminal activity to law enforcement;
• Address anti-retaliation protections and CAARA compliance in policies and training programs; and
• Understand protections to which whistleblowers are entitled and when it may be appropriate (and legally defensible) to move forward with adverse employment actions.

Companies are also encouraged to review the Division’s updated compliance guidelines for further insights into best practices. For more information, see this client alert. If you have any questions regarding compliance with whistleblower protections, please contact the individuals listed in this alert.