CFPB Circular 2024-04: Whistleblower Protections Under CFPA Section 1057

Summary re: Consumer Financial Protection Bureau Circular 2024-04: Whistleblower Protections Under CFPA Section 1057

The CFPB issued Consumer Financial Protection Bureau Circular 2024-04 to respond to the question, “Can requiring employees to sign broad confidentiality agreements violate Section 1057 of the Consumer Financial Protection Act (CFPA), the provision protecting rights of whistleblower employees and undermine the CFPB’s ability to enforce the law?

The CFPB released this circular on July 24, 2024 and the circular can be found here.

Response:

Yes.  Although confidentiality agreements can be entered into for legitimate purposes, such as to ensure the protection of confidential trade secrets, such agreements, depending on how they are worded and the context in which they are employed, could lead an employee to reasonably believe that they would be sued or subject to other adverse actions if they disclosed information related to suspected violations of Federal consumer financial law to government investigators. Threats of this nature can lead to violations of Section 1057 and impede investigations into potential wrongdoing, including the CFPB’s efforts to uncover violations of the consumer financial protection laws it enforces.

Analysis:

Section 1057(a) prohibits covered persons from terminating or otherwise discriminating against covered employees for engaging in whistleblowing activity.  The CFPB is issuing this circular to remind regulators and the public that covered persons who in certain circumstances require their employees to enter into broad confidentiality agreements that do not clearly permit communications with government enforcement agencies or cooperation with law enforcement investigations risk violating the CFPA’s prohibition on discrimination against whistleblowers and undermining the government’s ability to enforce the law.