Home / News & Insights / SEC and CFTC Whistleblower Update / Whistleblower protection amendment passes Senate committee

Whistleblower protection amendment passes Senate committee

The Senate Judiciary Committee unanimously approved an important amendment to the Defend Trade Secrets Act on Thursday that could make a big difference for future whistleblowers.

The amendment, co-authored by Sens. Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.), will protect whistleblowers who disclose trade secrets in confidence to a government official — federal, state or local — or to their attorneys solely for the purpose of reporting or investigating suspected violations of law. Trade secrets may be disclosed in court filings as well, if that is done under seal, such as a qui tam whistleblower complaint.

This provision clarifies that corporations and other entities won’t be able to sue whistleblowers for violating trade secret laws based on the whistleblowers’ consultations with their attorney or filing an under seal qui tam False Claims Act lawsuit or confidential claim with the Securities and Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC). The protection also extends to the use of trade secret information in an anti-retaliation lawsuit, provided the information is filed under seal and not disclosed except pursuant to court order.

The amendment compels employers to include notice of the new protections in any employee contract or agreement that governs the use of trade secret or other confidential information that is entered into or updated after the effective date of the amendment.

The threat of a potential lawsuit for disclosing trade secrets to the government as part of reporting misconduct can often make a whistleblower have second thoughts about coming forward. Threatening to sue over the disclosure of trade secrets is also a go-to tactic for companies trying to discredit and intimidate whistleblowers. The amendment removes that threat, while also ensuring appropriate protection for trade secrets.

“Too often, individuals who come forward to report wrongdoing in the workplace are punished for simply telling the truth,” Grassley said in a statement. “The amendment I championed with Senator Leahy ensures that these whistleblowers won’t be slapped with allegations of trade secret theft when responsibly exposing misconduct. It’s another way we can prevent retaliation and even encourage people to speak out when they witness violations of the law.”

There is no set date for a vote in either the House or the Senate on the legislation.

Let us help you.
Get a free, confidential case review