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July 23, 2007
| MEMORANDUM FOR: |
REGIONAL ADMINISTRATORS
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| ATTENTION: |
REGIONAL SUPERVISORY INVESTIGATORS
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| FROM: |
EDWIN G. FOULKE, JR.
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| SUBJECT: |
Policy for approving settlement agreements containing future employment waiver clauses in whistleblower cases |
In OSHA's administration of whistleblower protection statutes, OSHA reviews
settlement agreements between complainants and their employers reached
during the investigative stage to ensure they are fair, adequate, and reasonable,
in the public interest, and that the employee's consent was knowing and
voluntary.1
A limited number of these agreements contain clauses wherein a
complainant waives the right to seek further employment with his or her
employer. In those cases, OSHA must ensure that such clauses are consistent
with the underlying purposes of our whistleblower protection programs.
Based on a recent review of prior settlement agreements, OSHA believes it is
appropriate to examine, on a case-by-case basis, all future employment waiver
clauses under the 14 whistleblower protection provisions that OSHA administers
and enforces. In certain circumstances, an employment waiver in a
whistleblower settlement may not be reasonable or in the public interest.
Accordingly, OSHA will specifically review the terms of any employment waiver
clause in a settlement agreement as part of the existing review process. The
validity of a future employment waiver will depend upon the facts and
circumstances of each case. Among the factors that should be considered before
approving a settlement agreement in which the complainant agrees to waive his
or her rights to future employment are:
- The breadth of the waiver. OSHA should consider whether the future
employment waiver effectively prevents the complainant from working in his
or her chosen field in the locality in which he or she resides. In
considering this factor, the particular skills of the complainant should be
considered. Certain employees have skills in their chosen fields that are
readily transferable to many employers or to several industries, while
others may have skills that are tailored to one employer or industry.
Generally speaking, OSHA should have less concern with clauses that
narrowly waive an employee's right to work for his or her former
employer (or its subsidiaries and/or parent companies). Clauses,
however, that broadly restrict an employee's ability to seek employment
with any employer in the geographic area of the former employer's
worksite should be closely scrutinized.
- The amount of the remuneration. OSHA should consider whether the
complainant received adequate consideration in exchange for his or her
agreement not to apply for future employment with his or her employer.
- The strength of the complainant's retaliation case. In determining
whether a settlement agreement is "fair, adequate, and reasonable,"
OSHA generally considers the strength of the employee's case. The
strength of the employee's case and the corresponding risks of litigation
also will have bearing on the reasonableness of a future employment
waiver clause.
- Representation by counsel. Before approving future employment
waivers in cases where complainants are not represented by counsel,
OSHA should ensure that the complainant's consent to the waiver is
knowing and voluntary.
- Other relevant factors. Any other specific facts bearing on the
reasonableness of the waiver should be considered. For example, it would
be appropriate to consider whether the employee is intending to leave his
or her profession, to relocate, to pursue other employment opportunities,
or to retire. In such circumstances, the employee reasonably may choose
to forego the option to apply for future employment in exchange for a
larger monetary settlement as often occurs generally in employment
litigation when additional compensation (often characterized as front pay
in a settlement) is substituted for reinstatement by mutual agreement.
These factors are not intended to be exclusive and no individual factor is
dispositive. Each agreement must be examined on its own terms.
1This is required by some of the whistleblower statutes OSHA administers, and OSHA
has also reviewed settlements under the other statutes as a matter of longstanding policy.[ back to text ]
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