Federal Court Limits Reach of Sarbanes-Oxley Act
- Article Information
- Published on Thursday, 19 April 2012 18:49
The United States Court of Appeals, 1st Circuit, in Lawson v. FMR, has addressed an important question of first impression involving the Sarbanes-Oxley Act (SOX). Specifically, the court considered whether the whistleblower protections afforded by SOX apply to an employee of a contractor or subcontractor of a public company, when that employee reports activity which he or she reasonably believes may constitute a violation of any rule or regulation of the Securities and Exchange Commission, or any provision of federal law and such a violation would relate to fraud against shareholders of the public company? SOX provides, in part, that a public company may not discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee because of any lawful act done by the employee to provide information, or otherwise assist in an investigation, regarding any conduct which the employee reasonably believes constitutes mail fraud, wire
fraud, bank fraud, securities or commodities fraud; any rule or regulation of the Securities and Exchange Commission; or, any provision of federal law relating to fraud against shareholders, when such information or assistance is provided to, or the investigation is conducted, by: (A) a federal regulatory or law enforcement agency; (B) any member of Congress; or, (C) a person with supervisory authority over the employee. In the Lawson case, plaintiffs, Jackie Hosang Lawson and Jonathan M. Zang, filed separate lawsuits alleging unlawful retaliation by their employers, which are private companies providing advice s subcontractors to managers of a public company. The district court concluded that the whistleblower protections of SOX extends beyond "employees" of "public" companies to encompass the employees of private companies that are contractors or subcontractors to those public companies. On appeal, the 1st Circuit disagreed holding that whistleblower protections pursuant to SOX only apply to employees of public companies, not employees of private companies doing business with the public company. Read More.
OSHA Finds Employer Violated Whistleblower Protection Laws
- Article Information
- Published on Friday, 16 September 2011 02:04
The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) has found Bond Laboratories Inc. and its former CEO in violation of the whistleblower protection provisions of the Sarbanes-Oxley Act for allegedly improperly firing an employee. The DOL has ordered the company to re-hire the employee and pay approximately $500,000 in back wages, interest and compensatory damages. OSHA conducted an investigation after receiving a complaint from the employee. Bond Laboratories allegedly terminated the employee, an officer, for allegedly objecting to the manipulation of sales figures that
misrepresented the company's value to potential investors. According to OSHA, the employee repeatedly objected to this practice between March and October 2008, and that the objections contributed to the decision to terminate the employee. OSHA enforces the whistleblower provisions of the Sarbanes-Oxley Act and 20 other statutes protecting employees who report violations of various airline, commercial motor carrier, consumer product, environmental, financial, food safety, health care reform, nuclear, pipeline, public transportation agency, railroad and maritime laws. Pursuant to these laws, employers may not retaliate against employees who raise various protected concerns or provide protected information to the employer or to the government. Employees who believe they have been retaliated against for engaging in protected conduct may file a complaint with the secretary of labor to request an investigation by OSHA's Whistleblower Protection Program. According to Assistant Secretary of Labor for OSHA, Dr. David Michaels, "This corporate officer tried to do the right thing when asked to break the law…It is essential that America's workers do not have to fear retaliation when reporting wrongdoing. The Labor Department will continue to protect whistleblowers from retaliation by holding corporations, and when appropriate, CEOs, accountable." Read More.
HR Practice Pointer: What is the Sarbanes-Oxley Act?
- Article Information
- Published on Monday, 12 September 2011 22:03
The Sarbanes-Oxley Act (SOA) is federal legislation intended to protect employees (“whistleblowers”) who report certain federal law violations that have occurred in the workplace, or that the employee reasonably believes have occurred. Specifically, pursuant to the SOA, an employer may not terminate, demote, suspend, harass or retaliate against an employee who reports a violation of federal law or who is cooperating in a federal investigation regarding the employer’s alleged wrongful conduct. An employee who prevails in an SOA action is entitled to restatement (if applicable) back pay (if applicable) and compensation for special damages such as litigation costs and attorney fees. Further, the SOA imposes criminal liability on anyone who knowingly retaliates against a whistleblower. Read More.
