U.S. Department of Labor’s Final Rule Maintains Oral Complaint and Economic Restatement Provisions Despite Critical Comments
On March 5, 2015, the U.S. Department of Labor (“DOL”) issued its Final Rule governing the procedures for handling retaliation complaints under Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”). The Final Rule maintains the provisions of the DOL’s November 3, 2011 Interim Final Rule that allows employees to submit oral, in addition to written, complaints to the Occupational Safety and Health Administration (“OSHA”), and permits provisional orders of “economic reinstatement,” where an employer must provide full pay and benefits until administrative adjudication and any appeals are complete. The Final Rule also establishes the procedures and time frames for the handling of retaliation complaints by OSHA.
DODD-FRANK AMENDMENT OF SOX WHISTLEBLOWER RULES
Section 806 of SOX protects employees of public companies against retaliation for providing information to government agencies or Congress regarding potential fraud or violations of the securities laws. Section 806(b) provides that a person who alleges retaliation may file a complaint seeking reinstatement, back pay, and attorney’s fees. In 2010, Section 806 was amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which extended the statute of limitations to bring Section 806 claims from 90 to 180 days and provided that Section 806(a) statutory rights may not be waived by an arbitration agreement, among other changes.
OVERVIEW OF THE COMPLAINT PROCESS
Under the Final Rule, an employee who believes that he or she has been subject to retaliation has 180 days from learning of the alleged retaliation to file a complaint, either orally or in writing, with OSHA. This complaint initiates OSHA’s investigation, in which the employee must make a prima facie showing that: (i) the employee engaged in a protected activity; (ii) the employer knew or suspected that the employee had done so; (iii) the employee suffered an adverse employment action; and (iv) “the circumstances were sufficient to raise the inference that the protected activity was a contributing factor in the adverse action.” 29 C.F.R. § 1980.104(e)(2). If the employee makes such a prima facie showing, the burden shifts to the employer to demonstrate, by clear and convincing evidence, “that it would have taken the same adverse action in the absence of the complainant’s protected activity.” Id. at § 1980.104(4).
Under the Final Rule, OSHA is required to issue written findings as to whether there is reasonable cause to believe that the employer has retaliated against the employee within 60 days of the filing of the complaint. See 29 C.F.R. § 1980.105(a)(1). If OSHA finds reasonable cause, it must issue a preliminary order that includes all relief it deems necessary to make the employee whole, including reinstatement. A preliminary order requiring reinstatement is effective immediately, and reinstatement will not be automatically stayed during the administrative appeals process.
The parties have 30 days from receipt of OSHA’s preliminary decision to request a de novo hearing before an Administrative Law Judge (“ALJ”). Once the ALJ issues his or her decision, the parties have 14 days to lodge objections with the Administrative Review Board (“ARB”). Filing objections is a prerequisite to judicial review, and any grounds for objection which are not advanced are deemed waived. The ARB then has 30 days to decide whether to grant a petition for review. If the ARB grants the petition, its eventual decision will become the final order. If the ARB denies the petition, or fails to act on it within 30 days, then the ALJ’s ruling will become the final order. In either case, the parties have 60 days from the issuance of the final order to file a petition for review in the appropriate United States Court of Appeals.
If no final decision has been issued within 180 days after the filing of the complaint with OSHA, and there is no showing that the delay is due to the bad faith of the employee, the employee can bring a de novo action in the appropriate federal district court.
ORAL COMPLAINTS TO OSHA AND CONSTRUCTIVE REINSTATEMENT
One of the most controversial aspects of the DOL’s Final Rule is its decision to include provisions allowing for oral complaints under Section 806, which are to be reduced to writing by OSHA. This provision was in the DOL’s November 3, 2011 Interim Final Rule, and was the subject of criticism by commentators. Prior to the Interim Final Rule, 29 C.F.R. § 1980.103(b) required SOX retaliation complaints to be in writing and include a full statement of the acts or omissions alleged by the complainant to constitute violations of the Act. Commentators criticized this change on the basis that it shifted OSHA’s role from one of a neutral fact-finder to one of an advocate for the complainant, which coupled with the fact that the rule does not prescribe how the investigator must create the complaint, presented the risk that the complainant may later argue that OSHA did not thoroughly capture the complainant’s allegations, turning the investigator into an adverse witness. The DOL’s March 5, 2015 Final Rule maintains the oral complaint provision, however, based on OSHA’s practice of allowing for oral complaints in other contexts and the DOL’s reasoning that “the possibility that a dispute could arise regarding the claims raised to OSHA does not outweigh the benefits to whistleblowers and the public of allowing such complaints to be filed orally with OSHA.” 80 Fed. Reg. 11,865–02 at 11,869–670 (March 5, 2010).
The Final Rule also retained the reinstatement provisions from the Interim Final Rule that were criticized by commentators as going beyond implementing the changes called for by Dodd-Frank and implementing an agenda with no clear statutory basis. Specifically, the Final Rule also added language allowing OSHA to preliminarily order “economic reinstatement,” under which the complainant receives full pay and benefits but does not return to work until adjudication of the complaint is complete. An employer who ultimately prevails is not able to recover the cost of economically reinstating the employee. The Final Rule also removed language stating that reinstatement would be inappropriate when the complainant is a “security risk.”