The Occupational Safety and Health Administration (OSHA) has issued interim final regulations (pdf) governing its procedures for processing retaliation/whistleblower complaints under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley” or “SOX”). The SOX whistleblower provisions were amended by Sections 922 and 929A of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, enacted on July 21, 2010.
Notably, Section 922(a) of Dodd-Frank amended the Securities Exchange Act to establish a new securities whistleblower incentive and protection program. The SEC has already issued final regulations governing this program. Section 922(a) of Dodd-Frank added various protections for whistleblowers, including a prohibition on discharging, demoting, suspending, threatening, harassing (directly or indirectly) or otherwise discriminating against an employee for providing information to the SEC or assisting in an investigation or judicial or administrative action relating to the information provided. Section 922(c) of Dodd-Frank extended the statutory filing period for retaliation complaints under Sarbanes-Oxley from 90 to 180 days. If a final decision is not issued within that time period, and the delay is not due to the complainant’s bad faith, he or she is entitled to bring an action against his or her employer in federal court. The regulations have been changed to reflect the Dodd-Frank revisions affording parties the right to a jury trial. This section of Dodd-Frank also prohibits the waiver of such claims by pre-dispute arbitration agreements. Section 929A expressly states that the whistleblower protection provisions in Sarbanes-Oxley apply to employees of subsidiaries and affiliates of publicly-traded companies whose financial information is included in the consolidated financial statements of such companies.
According to OSHA – which is charged with enforcing the whistleblower provisions contained in 21 separate statutes – the new interim regulations “clarify and improve” the procedures for handling Sarbanes-Oxley whistleblower complaints, and make them consistent with the procedures in place for handing similar complaints under the other statutes over which OSHA has jurisdiction. In September, OSHA revised its Whistleblower Investigations Manual to reflect these new case handling procedures.
Among other revisions, OSHA’s interim final rule does the following:
- Changes certain terms for consistency (i.e., actions will be filed for “retaliation” instead of for “discrimination).
- Describes the activities that are protected under Sarbanes-Oxley and the conduct that is prohibited in response to any protected activities.
- Revises the statute of limitations for filing complaints from 90 to 180 days.
- Eliminates the requirement that whistleblower complaints to OSHA under Sarbanes-Oxley be detailed and in writing. Under the new regulations, “consistent with OSHA’s procedural rules under other whistleblower statutes, complaints filed under Sarbanes-Oxley need not be in any particular form. They may be either oral or in writing.”
- Describes the procedures that apply to the investigation of Sarbanes-Oxley complaints;
- With respect to the burdens of proof necessary to sustain a claim, the regulations state that the complaint will be dismissed unless the complainant has made a prima facie showing that protected activity was a contributing factor in the alleged adverse action. The preamble to the regulations explains that it is the Secretary’s position that complainant must prove by a “preponderance of the evidence” that his or her protected activity contributed to the adverse action; otherwise the burden never shifts to the employer to establish its defense by “clear and convincing evidence.”
- Explains that once the complainant establishes that the protected activity was a contributing factor in the adverse action, the employer can escape liability only by proving by clear and convincing evidence that it would have reached the same decision even in the absence of the prohibited rationale. The “clear and convincing evidence” standard isa higher burden of proof than a “preponderance of the evidence” standard.
- Explains that among other remedies, “in appropriate circumstances, in lieu of preliminary reinstatement, OSHA may order that the complainant receive the same pay and benefits that he received prior to his termination, but not actually return to work. Such ‘economic reinstatement’ is akin to an order of front pay. According to OSHA, “economic reinstatement is designed to accommodate situations in which evidence establishes to OSHA’s satisfaction that reinstatement is inadvisable for some reason, notwithstanding the employer’s retaliatory discharge of the employee.” The agency notes, however, that “there is no statutory basis for allowing the employer to recover the costs of economically reinstating an employee should the employer ultimately prevail in the whistleblower adjudication.”
- Outlines the various litigation steps, rules of and process for appealing decisions, and the roles of federal agencies involved.
The new interim procedures are effective as of November 3, 2011. Comments on these regulations are due within 60 days of the procedures’ publication in the Federal Register, which is scheduled for November 3. Comments may be submitted electronically through the federal eRulemaking portal; via fax to (202) 693-1648 (if comments do not exceed 10 pages); or by mail or hand-delivery to: OSHA Docket Office, Docket No. OSHA-2011-0126, U.S. Department of Labor, Room N-2625, 200 Constitution Avenue, N.W., Washington, D.C. 20210.