Total Articles: 45
DOL Review Board Re-Affirms SOX Does Not Apply Outside U.S.
A non-U.S. citizen employee of a non-U.S. company lacked rights under the employee protection provisions of Section 806 of the Sarbanes-Oxley Act (“SOX”), the Department of Labor Administrative Review Board has determined in Villanueva v. Core Laboratories, NV.
DOL Confirms SOX Whistleblower Protections Do Not Apply Extraterritorially
At a time when the extraterritorial reach of U.S. regulations seems to grow at a rate faster than the economy, U.S. employers breathed a sigh of relief when the U.S. Department of Labor's Administrative Review Board (ARB) confirmed by a 3-2 vote that the whistleblower provision of Title VIII of the Sarbanes-Oxley Act (SOX) has no extraterritorial application.
Seventh Circuit Revives Whistleblower Claim Brought Under RICO
A new federal court ruling creates an avenue for employees to rely on the Sarbanes-Oxley Act (SOX) to pursue retaliation claims under the Racketeer Influenced and Corrupt Organizations Act (RICO).
SEC Issues Regulatory Timeline for Implementing Dodd-Frank Provisions
The Securities and Exchange Commission (SEC) has published a chart outlining when it intends to issue new rules implementing sections of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). (pdf) Notably, within the next six months, the SEC plans to issue a final rule implementing Section 952 of the Dodd-Frank Act, which requires the SEC to adopt new disclosure rules for companies to report the use of compensation consultants and potential conflicts of interest. In addition, this section of the Act directs national securities exchanges/associations (e.g., NYSE, NASDAQ) to establish listing standards requiring publicly traded companies to have their compensation committee participants be members of the board of directors and meet a heightened standard of independence in order for their shares to continue trading on those exchanges. The SEC issued a proposed rule governing § 952 in March 2011. According to the SEC outline, the agency also plans to adopt the listing standards within a six-month timeframe.
Why Employers Don't Like Statutes Creating Causes of Action
One of the responses by the employer community to almost any proposed statutory cause of action is not that it supports employers who engage in whatever conduct is going to be prohibited, but that by adding yet another statutory cause of action, there is yet one more way for a lawsuit to be brought.
FINRA Proposal on Predispute Agreements to Arbitrate Whistleblower Claims
The Financial Industry Regulatory Authority (FINRA), the largest independent non-profit regulator for all securities firms engaged in business in the U.S., has proposed a long-awaited rule change intended to align its arbitration rules with the Dodd-Frank Consumer Reform and Wall Street Protection Act of 2010, Pub. L. No. 111-203, § 919 (2010) ("Dodd-Frank"), which invalidated predispute agreements to arbitrate certain whistleblower claims. The rule change would amend FINRA Rule 13200 of the Code of Arbitration Procedure for Industry Disputes, which presently mandates predispute arbitration of employment disputes (except statutory discrimination claims) between registered securities representatives and their employers.
House Subcommittee Advances Bill that Would Amend Dodd-Frank Whistleblower Bounty Program
On Thursday the House Subcommittee on Capital Markets and Government Sponsored Enterprises voted 19-14 in favor of advancing a bill that seeks to amend the whistleblower incentive provisions created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The Subcommittee approved the bill on a party-line vote, with Republicans voting in favor of the legislation.
Whistleblower Retaliation Claims Against Hospitals and Other Healthcare Providers Increase
As we recently reported, employees have been encouraged by a host of local, state and federal laws and regulations and regulatory agencies to “blow the whistle” on hospitals and other healthcare providers for perceived wrong-doing or noncompliance, resulting in skyrocketing claims and often huge recoveries for government agencies and whistleblowers. Nearly all of these laws and regulations also contain provisions for the protection of “whistleblowers” from subsequent retaliation and these laws and regulations have been amended to greatly expand the universe of who can obtain whistleblower protection.
New SOX Decision by the U.S. Department of Labor's ARB Expands Whistleblower Protection Yet Again, Including Protection for Theft from Employer's Computer System
In the case of an employee who admitted to stealing personal identifying information of coworkers and confidential business documents from the company computer system, the Department of Labor's Administrative Review Board (ARB) held recently that: (1) theft of confidential personal and corporate information may be protected activity, depending on the circumstances surrounding the theft; (2) the Sarbanes-Oxley Act's ("SOX") anti-retaliation provision protects employees who make disclosures to the Internal Revenue Service (IRS) under the IRS Whistleblower Rewards Program; and (3) an employee need not allege shareholder fraud for SOX protection to apply.
DOL Administrative Review Board Holds that Breach of a SOX Complainant's Confidentiality Is Retaliation Under SOX
In a decision falling somewhere between surprising and alarming, the U.S. Department of Labor's Administrative Review Board (ARB) held recently that section 806 of the Sarbanes Oxley Act (SOX), 18 U.S.C. § 1514A, protects a whistleblower against a breach of the confidentiality obligation in the internal reporting system of a publicly traded company. The decision, Menendez v. Halliburton, Inc., ARB Case Nos. 09-002 and 09-003 (Sept. 13, 2011), is surprising because the ARB expressly held that the words "in the terms and conditions of employment" that appear in section 806 to describe the scope of prohibited retaliation are "not significantly limiting words and should be construed broadly." That is, the presumed application of SOX to employment-based retaliation only may no longer be accurate. The sweeping language of the decision is alarming because it goes beyond the U.S. Supreme Court's retaliation threshold articulated in Burlington Northern v. White, 548 U.S. 53 (2006), to erase all standards for measuring retaliatory adverse actions except "non-triviality." In light of Menendez, employers must be more careful than ever before taking any actions – employment or otherwise – in the course of a whistleblower complaint situation, because they might later be deemed retaliatory.
Whistleblower in Your Midst - Presentation Materials
Seminar Materials for the July 21, 2011 Seminar
Employer’s Actions Have Unintended Consequences in Texas Whistle-Blower Case
In one of the most dramatic and convoluted scenarios ever seen in a whistle-blower case, a doctor has been disciplined by a medical board; a hospital administrator has been jailed; two nurses have been fired, criminally charged, acquitted, and then awarded $750,000; and a local sheriff has been removed from office and sentenced to jail, with a subsequent lengthy felony-probation. Employers who do not believe that recent legislative changes related to whistle-blower claims (Dodd-Frank Act, Sarbanes-Oxley, and state-based whistle-blower statutes) have begun to change the landscape of employment-related cases should take the time to read this story.
SEC Adopts Final Whistleblower Rules – Creating Strong Incentives for Whistleblowers and Expanding Whistleblower Protection from Retaliation
On May 25, 2011, the Securities and Exchange Commission (the “SEC”), in a divided 3-2 vote, adopted final rules to implement the whistleblower bounty program and anti-retaliation provisions enacted as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The final rules will become effective 60 days following their publication in the Federal Register.
SEC Issues Final Whistleblower Rules
On May 25, the SEC issued final rules implementing the whistleblower provisions of the Dodd-Frank Act (which are codified at Section 21F of the Exchange Act). Under the rules, the SEC will pay a “bounty” to whistleblowers who voluntarily provide the SEC with original information about a possible securities law violation that leads to a successful enforcement action resulting in monetary sanctions of over $1 million. The amount of the award can range from 10% to 30% of the monetary sanctions, as determined by the SEC in its discretion, based on factors listed in the rules.
SEC Adopts Final Dodd-Frank Whistleblower Rules by 3-2 Vote
On May 25, 2011, by a 3-2 vote, the Securities and Exchange Commission (SEC) issued final rules to implement the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rules are intended to reward individuals who volunteer “original information” to the SEC about actual or potential violations of securities laws, which information leads to a successful enforcement action by the SEC resulting in monetary sanctions in excess of $1 million. An eligible whistleblower may be rewarded between 10 percent and 30 percent of the monetary sanction.
No Protection to Employees Who Disclose Employer Wrongdoing to the Media
A federal appeals court has ruled that anti-retaliation provision found in the corporate governance law known as the Sarbanes-Oxley Act ("SOX") does not protect employees who disclose potential legal violations to the media. In the case of Tides v. Boeing Company, two Boeing internal auditors were fired after admitting that they provided internal company information to a newspaper reporter. They later sued, claiming that their termination was illegal.
WORKPLACE IMPLICATIONS OF THE DODD-FRANK ACT
On July 21, 2010, President Barack Obama signed H.R. 4173 better known as the Dodd-Frank Act (“Dodd-Frank”). The stated purpose of the new law is:
Dodd-Frank Meaningfully Expands Whistleblower Protection
The financial reforms in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) passed in 2010 contain sweeping expansions to the protections and incentives given to employees who report violations of federal securities laws. In addition to enhancing existing whistleblower protections, the Act now allows individuals who provide original information regarding securities laws violations to the SEC or CFTC sanctions to recover up to 30% of the amount sanctioned. This bounty may give employees an incentive to bypass internal ethics and compliance controls which emphasize early internal reporting and remedial action, in favor of going straight to the government in order to reap a potentially lucrative financial reward.
SEC Proposes New Rules for Implementing the Whistleblower Provisions of the Dodd-Frank Act.
In July 2010, Congress passed, and President Obama signed into law, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which addressed a wide range of matters. One of the provisions of Dodd-Frank was to establish a whistleblower program that requires the SEC to pay an award, under regulations prescribed by the SEC and subject to certain limitations, to eligible whistleblowers who voluntarily provide the SEC with original information about a violation of the federal securities laws that leads to the successful enforcement of a covered judicial or administrative action, or a related action. Dodd-Frank also provides that the SEC shall establish a Whistleblower Office to administer the SEC's whistleblower program, and prohibits retaliation by employers against individuals that provide the SEC with information about potential securities violations.
SEC Proposes Rules to Implement Whistleblower Incentives & Protection Program
On November 3, 2010, the Securities and Exchange Commission (the SEC) issued proposed rules to implement the whistleblower provisions added to Section 21F of the Securities Exchange Act of 1934 by the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted on July 21, 2010 (the Dodd-Frank Act). Under the proposed rules, the SEC will pay awards to eligible whistleblowers who voluntarily provide the SEC with original information leading to the successful enforcement by the SEC of a federal court or administrative action in which the SEC obtains monetary sanctions in excess of $1 million. If all of these criteria are met, a whistleblower could be eligible for an award ranging between 10 and 30 percent of the amount of monetary sanctions obtained by the SEC. Proposed Section 21F provides a complete and self-contained set of rules relating to the whistleblower program, as more fully described below.
SEC Issues Proposed Rules on Whistleblower Protections of Dodd-Frank: Encouraging Whistleblowers to Exhaust Internal Means First
Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted into law in the summer of 2010, added new Section 21F, entitled Securities Whistleblower Incentives and Protection Act, to the Exchange Act. The new section directed that the Securities and Exchange Commission pay awards of between 10 and 30 percent of the amount recovered, subject to certain limitations and conditions, to whistleblowers who voluntarily provide the Commission with original information about a violation of the securities laws that leads to a successful enforcement of an action brought by the Commission that results in monetary sanctions exceeding $1 million.
Drug Firm to Pay $750 Million False Claims Act/Whistleblower Settlement for Health Care Fraud
The U.S. Department of Justice reported a major $750 million settlement arising from claims first asserted by an employee/whistleblower against her former employer GlaxoSmithKline PLC (GSK). The civil and criminal penalties stem from allegations that the company manufactured and distributed defective and adulterated drugs from its now-closed manufacturing facility located in Puerto Rico.
Expansion of Whistleblower Protection: The Dodd-Frank Act.
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") which was designed to reform the U.S. financial regulatory system in response to the recent financial crisis. To accomplish this goal, the Act creates and expands protection and incentives for whistleblowers, among other provisions.
One Stop Shopping for Whistleblowers.
A hat tip to Today's Workplace, the blog of the Outten & Golden firm, for their link to OSHA's new whistleblower website, Office of the Whistleblower Protection Program.
Financial Reform Passes - Major Whistleblowing Changes as Well
Thanks to Jacob Zuckerman at the Employment Law Group for his on the spot reporting about the new whistleblowing provisions contained in the major financial bill that was passed earlier today. See Dodd-Frank Bill Provides Robust Whistleblower Protection, including a link to a download of all the whistleblower provisions contained in the legislation.
ARB Needs Your Help on SOX Coverage of Subsidiaries.
Well, that may be a bit of an overstatement, but the Administrative Review Board, which gets the final appellate say at the administrative level of Sarbanes Oxley claims has asked the Assistant Secretary of OSHA and the SEC, and it appears other amici, to submit briefs addressing four specific questions:
Health Care Employers Beware: New Whistleblower Provisions In The Patient Protection and Affordable Care Act.
The recent passage of the health care reform package did more than impact the provision of health insurance. It also created new potential sources of liability for employers in the health care arena. The Patient Protection and Affordable Care Act (PPAC), enacted in March of this year, inserted provisions into existing laws with the stated intent of encouraging individuals to report fraudulent conduct in connection with the delivery of health care funded through public finances.
Expanded Whistleblower Protections under the Amended FCA.
With examples of corporate
malfeasance dominating the
news, blowing the whistle is
more popular than ever.
Retaliatory discharge lawsuits
brought by whistleblowers,
however, are nothing new.
Such claims have an
understandable jury appeal;
nobody seems surprised that a
company, or a rogue manager,
strikes back after accusations of
wrongdoing. Sound policies and
conscientious compliance
departments can go a long way
towards minimizing liability for
whistleblower claims.
Ninth Circuit Permits In-House Counsel to Proceed with SOX Whistleblower Claims.
The Ninth Circuit recently issued its first decision addressing the substantive requirements necessary to establish a claim under the whistleblower protection provision of the Sarbanes-Oxley Act (SOX). See Van Asdale v. International Game Technology (9th Cir. August 13, 2009). In overturning the trial court's grant of summary judgment to the employer, the Ninth Circuit relied on the text of the statute and the Department of Labor's (DOL) regulations interpreting the statute.
Anti-Retaliation Law: Sarbox Whistleblowers.
The Sarbanes-Oxley Act of 2002, sometimes called Sarbox or SOX, is a federal law enacted in 2002, as a reaction to a number of major corporate and accounting scandals including Enron and WorldCom. Sarbox set new or enhanced standards for public company boards, management and their public accounting firms. It does not apply to privately held companies. The act contains a number of provisions ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law.
SARBANES-OXLEYS WHISTLEBLOWER PROTECTION EXPLAINED.
Sarbanes-Oxley Act of 2002 (SOX) is a federal law. Congress passed it on July 30, 2002, in response to a number of major corporate and accounting scandals. SOX, among other things, created whistleblower protection for any employee who reports that a publicly-traded company subject to SEC regulations has engaged in any of a number of fraudulent activities.
Although introduced with great fanfare, the Ninth Circuit Court of Appeals just recently issued its first opinion analyzing the substantive requirements necessary to establish a claim under the Acts whistleblower-protection provisions. In Van Arsdale v. International Game Technology, decided on August 13, 2009, the Court held whistleblowers must show only that they called attention to what they believed was fraud to sue their employers for wrongful termination under SOX.
Sarbanes-Oxleys 90-Day Statute of Limitations Not Triggered By Conditional Firing.
An employee alleging a violation of the Sarbanes-Oxley Act (SOX) must file a complaint within 90 days from the date of that alleged violation. That 90-day period begins to run from the date on which the complainant knows or reasonably should know that the complained-of act has occurred. In whistleblower cases under SOX, the 90-day statute of limitations runs from the date on which the employee receives final, definitive, and unequivocal notice of an adverse employment decision. As defined in SOX, the term unequivocal means that the notice is not ambiguous, and is free from misleading possibilities.
NEW WHISTLEBLOWER PROTECTION FOR EMPLOYEES WHO REPORT SUSPECTED MISUSE OF STIMULUS FUNDS.
The American Recovery and Reinvestment Act of 2009 (ARRA) is infusing billions of dollars into the private sector. To ensure that the monies are actually used for their intended purpose, Congress added a powerful whistleblower provision into the law.
Whistleblower Provisions in American Recovery and Reinvestment Act May Impact Employers.
The recently enacted American Recovery and Reinvestment Act (ARRA) contains whistleblower provisions that apply to non-federal employers who will receive funds under the ARRA. These provisions prohibit the employers from discharging, demoting, or discriminating against an employee for disclosing, to a covered entity, (1) gross mismanagement of an agency contract or grant relating to covered funds; (2) a gross waste of covered funds; (3) a substantial and specific danger to public health or safety related to the implementation or use of covered funds; (4) an abuse of authority related to the implementation or use of covered funds; or (5) a violation of law, rule, or regulation related to an agency contract (including the competition for or negotiation of a contract) or grant, awarded or issued relating to covered funds. All qualified employers are required post notice of the rights and remedies provided under this section.
Awful New Whistleblower Law Affects Huge Swath of Employers.
With almost no fanfare, Congress has stomped and gouged employers again. It has passed a new law that will affect a significant proportion of the American economy and create new "rights" (translation: opportunities to sue) for employees. Called the Consumer Product Safety Improvement Act of 2008 (Safety Improvement Act), the law provides broad protections to employees of manufacturers, private labelers, distributors, and retailers, who make complaints relating to consumer product safety.
New Reason for Employees to Whistle Consumer Product Safety Improvement Act.
The Consumer Product Safety Improvement Act of 2008, recently signed into law by President Bush, provides a new cause of action for whistleblowers who engage in protected activity related to defective products.
Changes In Obscure Law Could Affect Your Business
The Surface Transportation Assistance Act (STAA) is a law that doesn't receive a lot of coverage, but which potentially affects many companies. Because of recent changes that broaden the STAA, a lot more companies could be receiving unpleasant lessons in the statute.
The Critical Role Of HR In Sarbanes-Oxley Compliance.
Human Resources managers should never underestimate the importance of their role in Sarbanes-Oxley compliance. Too often, publicly-traded companies focus their Sarbanes-Oxley compliance efforts on financial reporting only, i.e., as a function of the Accounting and Legal departments. But the full participation of Human Resources can be critical in the corporation's efforts to comply with SOX.
Another Whistleblower Law To Worry About.
Whistleblowers now have a much bigger incentive to cry foul if they believe your company or you are pulling one over on the IRS. Under a tough new law passed by Congress in December 2006, whistleblowers now have a statutory right to collect a large bounty if they report tax fraud and the IRS ends up collecting money. This new law will undoubtedly lead to more claims filed by disgruntled employees who believe they have evidence of foul play in your workplace.
Hospitality: Coast Guard Gets Complaint, Employee Gets Fired, Riverboat Gets Sued.
Whistleblower claims have been on the rise for several years. A host of state and federal laws protect employees against reprisal for reporting allegedly illegal conduct by their employers to the appropriate governmental agencies. But a riverboat casino recently was hit with a case alleging a new twist in these laws. Several employees complained to the Coast Guard about a decision made by the Coast Guard, not the employer.
DOL Clarifies Protected Activity in Sarbanes-Oxley Whistleblower Cases.
In an important decision helping to define the Sarbanes-Oxley (SOX) whistleblower provisions, the Department of Labor's Administrative Review Board (ARB) has reversed the decision of an Administrative Law Judge (ALJ), finding that an airline employee did not engage in protected activity under SOX when she complained to her employer about what the ARB described as how the company spends its money or its ability to collect a debt. See Platone v. FLYi, ARB Case. No. 04-153. The ARBs decision provides some much needed guidance regarding what constitutes protected activity under SOX.
Whistleblower Wins Reinstatement and Money Damages (pdf).
On February 15, 2005, a U.S. Department of Labor administrative law judge (ALJ) ordered
Cardinal Bankshares Corporation to reinstate its former CFO, David Welch, even though the
companys CEO and board of directors strongly mistrusted and disliked Welch and had
already hired another CFO to replace Welch. The ALJ also ordered Cardinal to pay Welch
$65,000 in back pay and special damages and $108,000 for attorneys fees.
Sarbanes-Oxley: lessons for private employers.
Imagine that you work for a private, family-run business your familys business. Lets picture you as the bookkeeper and your husband (fond of red suits and ever reluctant to trim his long white beard) as the master toy craftsman and sole delivery person. With a few good hands, all of whom are very small (you provide reasonable accommodations so they can do their jobs) and like to wear funny hats and shoes (nothing obscene or violating your grooming policy hard to complain since you allow the beard), your business is by all measures successful.
A New Era for Whistleblowers.
Employment law concepts and protections historically mirror changes in societal and business norms.
DOL Adopts Interim Final Rule Implementing Whistleblower Protection Provisions of Sarbanes-Oxley Act [PDF File, p10].
The proposed regulations are to be effective on the first day of the first plan year that begins on or after January 1, 2004. However, plan sponsors should make changes now to include the new tax credit information and cease using the 1986 model notice (if they have not already done so).
