EMPLOYMENT RELEASES CAN DESTROY WHISTLEBLOWER SUITS

Often, companies fearful of whistleblower cases including False Claims Act cases, will encourage departing employees to sign releases which have broad language promising not to sue the company. The enforceability of these releases varies depending on the geographic location you live in and the court’s differing interpretation of law. Before signing, have counsel advise you, especially if you know of company wrongdoing especially fraud, which might be the basis for a whistleblower claim. In one recent case, the employee of a defense contractor brought a False Claims Act suit alleging that the company was overcharging for the production of fighter jets for the Air Force. After filing, the case, he signed a general employment release stating he would not bring any legal actions against the company. The contractor sought to dismiss the suit saying that the release precluded him from being able to advance the False Claims case. In U.S. ex rel Davis v. Lockheed Martin Corp, 2010 WL 3239228 (N.D. Tex Aug 16, 2010) the court rejected the argument of the company saying that the former employee could continue on as the case was filed before the release was signed.