Federal Court Limits Reach of Sarbanes-Oxley Act
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- 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.
Employer Must Pay $300,000 For Terminating an Employee Who Reported a Work-Related Injury
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- Published on Thursday, 29 December 2011 20:53
The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) is reporting that Omaha, Nebraska based Union Pacific Railroad Company must immediately reinstate an employee in Idaho who the company allegedly terminated after the employee reporting a work-related injury. The company must also pay the employee more than $300,000 in back wages, compensatory damages, attorney's fees and punitive damages. The employee filed a whistleblower complaint with OSHA, alleging suspension without pay and then termination 23 days after allegedly notifying the company of a work-related injury. OSHA's investigation found reasonable cause to believe that the disciplinary charges and termination were not based on the employee violating a work rule but were instead due to the employee reporting the injury to the railroad, which is a violation of the Federal Railroad Safety Act's whistleblower protection provisions. According to Assistant Secretary of Labor for OSHA, Dr. David Michaels, "This case sends a clear message that OSHA will not tolerate retaliation against workers for reporting a work-related injury. An unreported injury is an uninvestigated injury. Nothing is learned that can help prevent the next injury…The safety of all workers is endangered when employers intimidate injured workers so that they do not report injuries." Read More.
OSHA Announces Interim Final Rules on Sarbanes-Oxley Whistleblower Procedures
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- Published on Thursday, 03 November 2011 16:40
The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) will publish interim final rules in the Nov. 3 Federal Register. The rules revise the regulations governing whistleblower complaints filed under the Sarbanes-Oxley Act of 2002. The Act protects employees of publicly traded companies, and of certain other employers, from retaliation for reporting mail fraud, wire fraud, bank fraud, securities fraud, violations of SEC rules or regulations, or violations of any provision of federal law relating to fraud against shareholders. OSHA would like public comment on the interim final rule. OSHA Assistant Secretary Dr. David Michaels commented that "Fraudulent practices by publicly held corporations have contributed to the economic difficulties currently facing our nation…The best way to prevent this from happening in the future is on ensure that workers feel free to blow the whistle on corrupt corporate practices without fear of retaliation, and OSHA is committed to protecting the rights of those workers to speak out." The interim final rule can be viewed at http://s.dol.gov/JN. Comments, which must be received by Jan. 3, 2012, may be submitted electronically via the federal rulemaking portal at http://www.regulations.gov, or by mail or fax. Faxed submissions, including attachments, must not exceed 10 pages and should be sent to the OSHA Docket Office at 202-693-1648. Comments submitted by mail should be addressed to the OSHA Docket Office, Docket No. OSHA-2011-0126, U.S. Department of Labor, Room N-2625, 200 Constitution Ave. NW, Washington, D.C. 20210. Read More.
Spike In Whistleblower Cases
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- Published on Tuesday, 27 September 2011 15:40
Since 2005, there has been an increase in whistleblower cases apparently because employees are more willing to report workplace fraud, corruption and general unlawful behavior related to their employers. As reported by msnbc.com, “It’s a trend that labor and shareholder advocates applaud, but corporations dread, and it’s intensified in recent months for a host of reasons, according to legal experts. A new law providing monetary rewards for whistleblowers kicked in last month (in addition to scores of federal and states whistleblower protections put in place in recent years). There’s also a growing desire on the part of citizens to step up when they see wrongdoing following an economic downturn largely caused by malfeasance in corporate America. And there has been a beefing up of government enforcement to protect citizens who come forward with their accounts of misconduct from retaliation. Indeed, just last week OSHA announced it had ordered Bank of America to pay a whistleblower $930,000 in interest and back wages and reinstate the employee.” Read More.
OSHA Finds Employer Violated Whistleblower Protection Laws
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- 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.
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