The Securities and Exchange Commission has reached a consent agreement with BlueLinx Holdings, an Atlanta-based building products distributor, over allegations it violated securities laws when using severance agreements that required outgoing employees to waive their right to monetary recovery if they filed a complaint with the Commission or other federal agencies.
The company agreed to pay a $265,000 penalty.
According to the SEC’s order, BlueLinx added the monetary recovery prohibition to all of its severance agreements in mid-2013, nearly two years after the SEC’s adoption of Rule 21F-17, which prohibits such activity. The restrictive language forced employees leaving the company to waive possible whistleblower awards or risk losing their severance payments and other post-employment benefits.
“Companies simply cannot undercut a key tenet of our whistleblower program by requiring employees to forego potential whistleblower awards in order to receive their severance payments,” Jane Norberg, acting chief of the SEC’s Office of the Whistleblower, said in a statement.
BlueLinx consented to the SEC’s cease-and-desist order without admitting or denying the findings. The company agreed to amend its severance agreements and notify former employees who executed severance agreements after Aug. 12, 2011 that the prohibition on providing information to SEC staff and accepting whistleblower awards was invalid.