Sarbanes-Oxley Retaliation: Any person terminated from a publicly traded company may have a claim for whistleblower protection under Sarbanes-Oxley if they were in a position to have knowledge of corporate misconduct and reported the misconduct to someone of authority in the company or to an outside third party like an SEC investigator. The law which Congress enacted in the wake of the Enron scandal is designed to give added protection to employees who come forward to expose corporate misconduct.

Sarbanes-Oxley whistleblower protection outline:

Section 806 of the Sarbanes-Oxley Act [the “Act”] amends 18 U.S.C. § 1514A to provide protection for individuals who are whistleblowers of corporate fraud. This law reaches not just to companies, as Title VII and several other employment related laws do, but it also reaches to “any officer, employee, contractor, subcontractor, or agent of such company.” Thus, the anti-retaliation provisions of the Act can impose liability upon the individual who retaliates, in addition to the corporate entity.

In order to be protected, the employee must:

1. work for a publicly traded company; and
2. provide information or assistance to an investigation regarding any conduct which the employee reasonably believes constitutes corporate fraud;
   1. to a federal regulatory or law enforcement agency or any member or committee of Congress; or
   2. to any person with supervisory authority over the employee or any other person working for the employer with the authority to investigate, terminate or discover misconduct; or
3. participate in any manner in a proceeding related to any violation of the anti-fraud laws

If an employee is discharged, demoted, suspended, threatened, harassed or in any manner discriminated against, the employee has a right to file a complaint with the Secretary of Labor. This complaint is filed with the Occupational Safety and Health Administration (“OSHA”) and procedurally governed by 49 U.S.C. §42121(b) (the same section that provides the procedure for handling the protection of employees complaining of air safety). If the Secretary of Labor has not issued a final decision within 180 days of the filing of the complaint, the employee has a right to file a lawsuit in the United States district court.

A Complaint for violation of the Act is entitled to expedited treatment. These are the primary administrative steps a Complaint takes towards resolution:

1. The employee has 90 days from the date of the violation to file a complaint. After filing the complaint, the employee may be interviewed by the OSHA investigator. This interview forms part of the original complaint. As a threshold matter, the original complaint must show that the protected activity was a “contributing factor” in the adverse employment action. A contributing factor is generally any factor that tends to affect in any way the outcome of the decision. This is a fairly low evidentiary requirement.
2. The complaint is assigned to OSHA for an investigation that must be completed within 60 days. As a result the employer must respond to the complaint within 20 days.
3. If the employer is able to show by “clear and convincing evidence” that the adverse employment action would have been taken regardless of the protected activity, the complaint is dismissed without investigation.
4. OSHA proceeds with its investigation, including the interviewing of the employer and the reviewing of documents. Typically, the employee is not involved in this process beyond making the original complaint.
5. If OSHA determines that “reasonable cause” exists to believe that a violation of the Act has occurred, then it must issue its findings and a preliminary order. The preliminary order has two (2) components. The first being what may be referred to as general relief, including back pay and other remedies. The other is the reinstatement portion. This preliminary order has the effect of returning the employee to the same position he or she occupied prior to the adverse employment action. If the employer can demonstrate that the employee poses some sort of safety risk, then the employer can avoid reinstatement, but still must pay the employee the wages and benefits he or she would have earned. While the general relief is not effective for thirty (30) days after receipt by the parties, the reinstatement order is effective immediately.
6. If no objection and request is filed within the thirty (30) day window, the preliminary order becomes a final order. If the preliminary order becomes a final order, there is no right to review, judicial or administrative.
7. If there are objections and a request for review filed, there is a hearing before an Administrative Law Judge (“ALJ”). This has the effect of staying all of the portions of the preliminary order except for the reinstatement order. Since the entire process must take less than 180 days from complaint filing to final action by the Department of Labor, you may not get full and complete discovery. OSHA may or may not, at its discretion, participate in the hearing. The Securities and Exchange Commission may or may not, at its discretion, participate in the hearing.
8. After the hearing, the ALJ will issue a decision setting forth the findings and conclusions and entering an order. As with the preliminary finding, the employee’s burden is to prove that the protected activity was a contributing factor in the adverse employment action. By contrast, the employer must prove by clear and convincing evidence that it would have taken the same action regardless of the protected activity. The decision of the ALJ is effective ten (10) business days after the date of the decision unless a petition for review has been filed with the Administrative Review Board (“ARB”). The only exception to this is with orders of reinstatement. An order either affirming or overturning the reinstatement is effective immediately upon its receipt and will not be stayed, even if a timely petition for review is filed.
9. In order to appeal the decision of the ALJ, a petition for review must be filed within ten (10) business days of the date of the decision of the ALJ and must state specifically the finding, conclusion or order to which exception is taken. Any finding, conclusion or order not excepted is deemed accepted. If a petition for review is not filed within the ten (10) day window, the order of the ALJ is final and completely nonreviewable.
10. After a petition for review is filed, the decision of the ALJ will still become the final decision of the Secretary unless the ARB issues a notice to the parties that the case has been accepted for review. This notice must go out within thirty (30) days of the filing of the petition. If the ARB accepts the decision for review all orders of the ALJ are stayed, pending the review, except for the reinstatement order.
11. The ARB determines if briefs are necessary for its review and set out the terms under which briefs are to be filed by the parties. The factual determinations of the ALJ are reviewed to determine if substantial evidence supports the decision. Legal determinations of the ALJ are reviewed de novo. The ARB must issue its final decision within 120 days of the date of the conclusion of the ALJ hearing.
12. The decision of the ARB becomes the final decision of the Secretary. If any person is adversely affected by this final decision, he may file a petition to review the final decision in the United States Court of Appeals for the circuit in which the violation is alleged to have occurred. This petition for review must be filed with sixty (60) days of the date of the issuance of the final decision and is not subject to review in any other proceeding.

Any final decision of the Secretary, including the preliminary order, decision of the ALJ and decision of the ARB, can be enforced by filing a civil action seeking to enforce the order in the United States district court for the district where the violation occurred.

If at the conclusion of 180 days from the date of the filing of the original Complaint, this process has not reached its conclusion, the employee has the right to bring a lawsuit in the United States district court for review of the charged misconduct. The exercise of this right on behalf of the employee presumes that the employee has not agreed to an extension of this deadline (e.g., for the purpose of conducting more discovery before the ALJ) and has not engaged in any other sort of bad faith conduct which has delayed the process. In order to effect this right, the employee must file written notice with the ARB or the ALJ, depending on where the proceeding is pending. This written notice must be filed and served upon all of the other parties to the proceeding and a copy must also be served upon the Assistant Secretary for OSHA.

Any settlement, after the filing of a complaint, must be approved by OSHA. If the matter has proceeded to a hearing before the ALJ or the ARB, that body must also approve the settlement. The approved settlement becomes the final order of the Secretary and may be enforced as with any other final order.

What can the injured employee recover?

Under the Act, an injured employee can recover his or her position and all lost wages and benefits, plus interest. The employee may also recover “compensation for any special damage sustained… .” This specifically includes litigation costs, expert witness fees and reasonable attorney’s fees. No other damages appear recoverable.

Can the employee who makes a complaint wind up paying the employer’s attorney’s fees?

Under the Act and its implementing regulations, the answer is yes – to a limit. An employee who files a frivolous or bad faith complaint can be made to pay the employer’s attorney’s fees up to $1,000.00.