Public company employers finally have guidance on procedures for handling whistleblowing employees’ retaliation charges under the Sarbanes-Oxley Act, the law that prohibits a publicly traded company from retaliating against an employee who files a fraud complaint with the Securities and Exchange Commission or participates in or assists a federal fraud investigation.
The U.S. Department of Labor has issued rules and procedures for handling these retaliation complaints.
Under the new rules, employees who reasonably believe they have been retaliated against in violation of Sarbanes-Oxley must file a written complaint with the Occupational Safety and Health Administration area director within 90 days of the date of the alleged retaliation. Once the complaint is filed, the DOL notifies the company and the SEC of the allegations and evidence.
The OSHA area director then reviews the complaint to see if there is reasonable cause to believe that a violation occurred. If the director finds reasonable cause, he or she will start an investigation and issue a written decision within 60 days of the filing of the complaint.
The OHSA director will either dismiss the complaint or order relief for the employee, for example, immediate reinstatement, back pay, litigation costs, and reasonable attorney fees. Sarbanes-Oxley does not provide for emotional distress or punitive damages.
The employer has 30 days to file written objections with the DOL and request a hearing, which will take place before a DOL administrative law judge. Otherwise, the findings become final and are not subject to judicial review. While an appeal will put most types of monetary relief on hold, the employer will have to reinstate the employee pending the appeal if the DOL ordered it to do so.
In cases in which the administrative law judge has not issued a final decision within 180 days of the employee’s complaint, Sarbanes-Oxley allows, as an alternative procedure, the employee to file a de novo action in federal court.
In light of these new, expedited procedures, employers should be prepared to defend against a whistleblower’s charges of retaliation by documenting performance reviews and warnings with written memos and having employees sign to acknowledge receipt. They should be specific in employee evaluations, citing observable incidents that demonstrate the company’s view of the employee’s performance. Thomas A. Shumaker is an attorney with Eckert Seamans Cherin & Mellott. Reach him at www.escm.com.
