On March 5, 2015, OSHA issued a long-awaited Final Rule regarding SOX whistleblower procedures and related matters. The new Final Rule will replace the Interim Final Rule enacted in 2011, after Dodd-Frank amended SOX. The Final Rule largely follows the Interim Final Rule, even though commenters expressed a range of serious concerns. One key revision that was implemented in the Final Rule based on response from commenters was a procedure requiring each party’s filings to be shared with the other party.
As an initial matter, Dodd-Frank amended several key provisions of Section 806 of SOX and expanded protections for employee-whistleblowers. For example, it changed the SOX statute of limitations for filing a complaint from 90 to 180 days. And it expanded the SOX definition of “covered employers” to include subsidiaries and affiliates of publicly traded entities and national credit-rating agencies. OSHA’s Interim Final Rule enacted in November 2011 implemented those modifications temporarily while the DOL solicited comments from stakeholders.
Following implementation of the Final Rule, a covered employee who believes his employer took adverse action against him based on his protected activity (including reporting what he “reasonably believed” to be mail, bank, wire or securities fraud), may file a complaint with OSHA within 180 days of the action. The complaint may be oral or written, and the employee must show only that his or her protected activity was a contributing factor to the adverse action. The employer must then show by clear and convincing evidence that it would have taken the adverse action regardless of the protected activity; if it fails to do so, then OSHA’s investigation will continue.
In addition, if, after its investigation concludes, OSHA determines that there is reasonable cause to believe a violation of Section 806 of SOX has occurred, then OSHA will issue a preliminary order including any appropriate relief to make the employee whole, including reinstatement. The employer may file an objection within 30 days of OSHA’s preliminary order and may request a hearing with an ALJ. However, any relief included in the preliminary order – including reinstatement – will take effect immediately. Even if the employer is eventually found to have not retaliated against the employee, the employer may not recover wages paid during the reinstatement period under the Final Rule – despite commenters concern about this issue.
Employers covered by Section 806 of SOX need to be vigilant in responding to whistleblower complaints in light of OSHA’s strict requirements. Moreover, they should recognize that the risks have heightened further, as OSHA is accepting oral SOX whistleblower complaints and, in rejecting a range of comments to the Interim Final Rule, has taken a firm stance on issues related to reinstatement of whistleblowers.