USA – DISTRICT OF COLUMBIA Law and Practice Contributed by: Connie N. Bertram, Bertram LLP
and whether it did a thorough review of the nature, extent, origins and consequences of the conduct and related behaviour; and • whether the company promptly made available to SEC staff the results of its review and provided suf - ficient documentation reflecting its response to the situation. Public companies may have the obligation to disclose to shareholders the results of internal and external investigations of workplace misconduct. In Press Release 2023-22, the SEC announced that it had entered into a USD35 million settlement with Activi - sion Blizzard for failing to implement controls to col - lect and review employee complaints about workplace misconduct, resulting in the failure to disclose material information to investigators, and for requiring employ - ees to sign separation agreements that prohibited them from disclosing securities law violations. Acti - vision also faced a putative class action shareholder lawsuit for failing to disclose government investiga - tions of alleged pervasive workplace misconduct. In 2023, the SEC settled charges against McDon - ald’s and former CEO Steve Easterbook for making misstatements Easterbook made during an internal investigation in order to receive a USD105 million sev - erance payment. The Director of Enforcement of the SEC explained that “[w]hen corporate officers corrupt internal processes to manage their personal reputa - tions or line their own pockets, they breach their fun - damental duties to shareholders, who are entitled to transparency and fair dealing from executives… By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easter - brook broke that trust with – and ultimately misled – shareholders”. In addition to repaying the bonus, the SEC imposed a five-year officer and director bar and a USD400,000 penalty. 2.3 Confidentiality Agreements and NDAs Many employers have adopted policies and practices protecting the confidentiality of workplace investiga - tions. These rules encourage employees to make complaints and participate in workplace investiga - tions without fearing retaliation or co-worker con - flict. However, overly restrictive confidentiality rules may be viewed as restrictions on employees’ rights
under Section 7 of the NLRA to discuss their con - cerns with co-workers or dissuade them from mak - ing complaints. Moreover, enforcement agencies such as the SEC have continued to enforce restrictions on employee confidentiality agreements. The current standard applied by the NLRB is the Stericycle standard, which in 2023 replaced the more employer-friendly Boeing test. Under Stericycle , work- place rules, such as confidentiality rules, are presump - tively unlawful if they have a reasonable tendency to chill employees from exercising their Section 7 rights, evaluated from the perspective of an economically dependent employee. Employers can rebut this pre - sumption only by proving the rule advances legitimate business interests and cannot be more narrowly tai - lored. In a 5 May 2025 ruling, an NLRB administrative law judge (ALJ) addressed an acknowledgment form Costco used during internal investigations, which prohibited employees from recording interviews and required confidentiality during ongoing investiga - tions. The ALJ, applying the standard in Stericycle , concluded that the confidentiality provision had a rea - sonable tendency to chill employees’ Section 7 rights by preventing them from sharing information regard - ing harassment complaints and soliciting support from others. He also ruled that the savings clause was too vague to adequately inform employees of their pro - tected rights, particularly given the threat of discipline for violations. Although this decision is (as of January 2026) on appeal to the board, the board was unable to decide cases until additional members were appointed on 7 January 2026. It is anticipated that the newly composed board will overturn the Stericycle standard. On 16 January 2025, in Memorandum 25-04 departing NLRB general counsel Jennifer A Abruzzo offered employers a road - map for balancing employment rules and employee rights in internal investigations under the Stericycle standard. Less than a month later, NLRB acting gen - eral counsel William Cowen issued Memorandum 25-05, which rescinded 29 policy memoranda issued by his predecessors, including 25-04. Although the Memorandum noted that additional guidance would be forthcoming, a new Memorandum has not yet been
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