Can Employers Be Held Labile for Disclosures Made in an SEC Filing?

In a case that is hard to fathom, an employer is facing retaliation charges for disclosures made in SEC filings, which were required by SEC disclosure law and regulations. The employee made an internal complaint of sexual harassment by her manager. After making the complaint she quit and filed with the EEOC. The company did not disclose the complaint in its next quarterly SEC filings, presumably because it was not viewed as material. However, in its next two quarterly filings it did disclose the complaint but did not identify the employee by name, even though SEC regulations require such disclosure. Thereafter, the EEOC sought additional information about the complaint, which the employer’s General Counsel felt might require disclosure about other harassment complaints. In the next quarterly disclosure there was still no identification of the employee. The EEOC then conducted interviews about the complaint and in the next quarterly filings the employer identified the employee by name; again, as SEC regulations require. The disclosure was seeming benign reading: On January 20, 2008 Celia Greengrass filed a sexual harassment complaint with the EEOC. The claim is still under investigation by the EEOC but [employer] believes the claim to be meritless and will vigorously defend itself.”

After this filing, the employee filed a second EEOC charge, for retaliation, asserting that the disclosure had made her unemployable because when any prospective employer Googled her name this SEC filing came up. The District Court granted the employer summary judgment, but a panel of the Seventh Circuit reversed the ruling, stating that they found it suspicious that disclosure of her name was made only after the EEOC increased the intensity of its investigation.

In my view, this case is an outlier that hopefully will be reversed by an en banc court. That being said, there are some lessons to be learned from it.

First, employers must be aware that, unlike straight discrimination charges which require that the unlawful conduct occur during employment, retaliation charges may be brought by former employees for conduct taking place after employment ends. Second, employers should be sure to comply with disclosure requirements at all times. Had the employee’s name been disclosed in the first SEC filing it is doubtful this claim would have been brought, much less survived summary judgment.

For questions, comments or additional information, please contact Robert Small, Partner in our Employment Practice Group, at or via phone at 215.495.6541.