7 Illegal Things Your Boss Might Be Doing

5. Retaliating Against Whistleblowers‍

Exposing illegality is both a moral and legal obligation. If your boss comes after you for shedding light on illegal activities within the company, you have the law behind you. 

The Whistleblower Protection Act, enacted in 1989, enforces various safeguarding features for employees who suffer from retaliation after engaging in disclosures. Covering more than 20 federal laws, the program within the Act encompasses both public and private employees, although you need not be an employee to come forward with original information exposing malpractice.  

In 2023, the US Securities and Exchange Commission (SEC) reported a record year in enforcement success for the agency’s whistleblower program. After receiving over 18,000 whistleblower tips during the fiscal year, the program awarded almost $600 million to insiders reporting fraud. 

The Whistleblower Protection Rules have been further extended to private business use of non-confidentiality agreements (NDAs) so that they do not discourage potential whistleblowers from bringing their concerns to the SEC. Hence, if your boss makes you sign a document that explicitly prohibits you from recording and reporting security violations or limits the ability of the employee to collect financial rewards, it is not compliant with SEC law.

For example, Monolith Resources, a Nebraska-based energy company was taken to court by the SEC for violating rules laid down by the Whistleblower Protection Act. The severance agreement given to the company's departing employees sought the forgoing of monetary awards upon filing claims against or participating in investigations with government bodies in relation to the company. A civil penalty amounting to $225,000 was agreed upon during the settlement, in addition to corrective actions. 

This example displays how, despite laws against it, your boss or upper management can design agreements and contracts to bring down reporting incentives. In addition to stirring up suspicions about a company’s ethical practices, it shows a disregard for legal protections given to whistleblowers. 

6. Signing Overbroad Non-Compete Agreements

You are not required to blindly sign a non-compete agreement as part of your onboarding if you feel it can be challenged for being too broad-based and inflexible. While they are widely considered to be instruments that hamper competition in the market and suppress wages, non-compete agreements are also illegal in many states. 

California, North Dakota, Minnesota, Colorado, and Oklahoma have a total ban on non-compete agreements for employees, with limited exceptions in place. California recently passed signed Senate Bill (SB) 699 to enforce the annulment of non-compete clauses. 

Another California bill, AB 1076, is under consideration for a reinstatement of the state law that would require companies to notify current and former employees that their signed non-compete clauses stand void. 

New York has similarly taken steps to propose laws to prohibit restrictive covenants, with Senate Bill S3100 currently stuck in limbo due to opposition by business groups. 

Even where they are allowed, there are reasonable limitations placed on how broad non-compete agreements can be so as to not hinder an employee’s right to work in their field. 

The National Labor Relations Board recently issued a memo to address this very issue, deeming such clauses to be violating the NLRA. There have been several other federal government actions to outlaw non-compete agreements across the country, including a proposed ruling by the Federal Trade Commission (FTC) for a full-fledged ban.

7. Employment Misclassification

In the era of the gig economy, the line between employees and independent contractors can become blurred. There has been a steady rise in independent contracting in the US, especially in the wake of the global COVID-19 pandemic. More and more companies are now looking at outsourcing core business operations to scale up quickly, surpass geographical boundaries, and widen their talent pools without taking on the responsibilities of hiring in-house employees. 

It is a trend that carries a substantial risk of employment misclassification!

While regular employees have certain obligations and regular duties, contractual work comes with the benefits of being flexible and self-directed. An in-house employee has several privileges accorded by federally-mandated employment benefits. They include:

• Minimum wage guarantees.
• Overtime pay.
• Medical and family leave.
• Pension schemes.
• Workplace safety.

This is why you should pay close attention to your rights as a worker. If your boss makes you work as a full-time worker but denies you classification as an employee, you may be well within your rights to sue them. Misclassified employees can be wrongfully denied minimum wage and overtime pay, which the FLSA otherwise guarantees. 

The US Department of Labor has recently laid out a new rule with guidance on how to analyze a worker’s employment classification. Various states, likewise, have provisions through which you can challenge your boss on grounds of improper classification, either as an employee or an independent contractor. State agencies and tax bodies like the Internal Revenue Service (IRS) can also levy fines on companies for non-compliance.

Despite these legal frameworks, employment misclassification remains a fairly common practice in various industries as it allows businesses to save costs and shift the tax burden onto the contracted party. It is possible to resist such unfair practices, however, with proper legal guidance.