Employers and employees alike are increasingly facing the prospect of being involved in issues relating to allegations of corporate fraud. Oftentimes the issue first arises when an employee-whistleblower voices a complaint internally to her employer. The employer’s response to an internal complaint – and treatment of the employee making the complaint – is critical to determining how the matter progresses. Under Section 806 of the Sarbanes-Oxley Act, of course, employers cannot retaliate against corporate fraud whistleblowers.
Providing guidance to employers and employees, the Department of Labor recently published a final rule addressing procedures and timing for claims of retaliation against corporate fraud whistleblowers. Under the rule, an employee who believes her employer retaliated against her for blowing the whistle on corporate fraud must file a complaint with OSHA within 180 days. In that complaint, which may be written or oral, the employee must show that her whistleblowing was a contributing factor in the adverse action taken by her employer. OSHA is then charged with investigating the complaint and, if it finds reasonable cause to believe the employer violated SOX, issuing a preliminary order providing appropriate relief to make the employee whole, which may include reinstatement.
During OSHA’s investigation, importantly, the employer will be advised of the allegations made and will have the opportunity to show by clear and convincing evidence that it would have taken the adverse action against the employee regardless of the whistleblowing. If the employer makes that showing, the investigation ends.
The Department of Labor’s final rule on SOX whistleblower retaliation – Procedures for the Handling of Retaliation Complaints Under Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002 – was effective as of March 5, 2015. SOX Final Rule