Home » Sarbanes-Oxley » Sarbanes-Oxley Whistleblower Retaliation Evidence Two-Step

Sarbanes-Oxley Whistleblower Retaliation Evidence Two-Step

On October 9th, the US Department of Labor’s Administrative Review Board issued a split 2-1 panel decision in Fordham v. Fannie Mae, a whistleblower retaliation matter filed under Section 806 of the Sarbanes-Oxley Act. Section 806 provides a federal cause of action for employees who allege their employers retaliated against them for reporting violations of federal securities law. While Fordham does not address any issues of first impression, the decision is particularly important in addressing the two-step burden of proof process in Section 806 whistleblower retaliation cases.

The first step involves the employee-whistleblower proving a prima facie case by a preponderance of the evidence. An employee-whistleblower’s prima facie case under Section 806 consists of four elements: (1) employee engaged in protected activity, (2) the employer knew or should have known of the protected activity, (3) the employee suffered adverse employment action, and (4) the employee must show that her protected activity was a “contributing factor” to the employer’s decision regarding the adverse employment action.

Once the employee meets that initial burden, the employer may still avoid liability by demonstrating, by clear and convincing evidence, that it would have taken the same personnel action for legitimate, nonretaliatory reasons. Addressing this two-step process and differing burdens placed on the employee-whistleblower and the employer, the ARB explained:

The determination whether a complainant has met his or her initial burden of proving that protected activity was a contributing factor in the adverse personnel action at issue is required to be made based on the evidence submitted by the complainant, in disregard of any evidence submitted by the respondent in support of its affirmative defense that it would have taken the same personnel action for legitimate, non-retaliatory reasons only. Should the complainant meet his or her evidentiary burden of proving “contributing factor” causation, the respondent’s affirmative defense evidence is then to be taken into consideration, subject to the higher “clear and convincing” evidence burden of proof standard, in determining whether or not the respondent is liable for violation of SOX’s whistleblower protection provisions.

The ARB, accordingly, concluded that Section 806 claims have two separate burdens of proof: a preponderance of the evidence burden for the whistleblower, and a higher clear and convincing burden for the employer.

Fordham v. Fannie Mae, ARB Case No. 12-061 (Oct. 9, 2014)

1 Comment

  1. Paul says:

    Please see attached links below and also note the hyperlinks that may be within each article for additional information.





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