An ALJ at the U.S. Department of Labor (DOL) recently ruled that a former CFO was entitled to approximately $1.9 million in back pay, front pay, and compensatory damages, concluding that he was retaliated against in violation of Section 806 of SOX. Becker v. Community Health Systems Inc., 2014-SOX-00044 (ALJ Nov. 9, 2016).

Background. Complainant held the position of CFO at Rockwood Clinic, an affiliate of Community Health Systems. Complainant alleged that he was constructively discharged after he declined to lower projected losses. He alleged that he was directed to adjust his projected EBITDA of negative $12.8 million to negative $4 million without explanation. He claimed that after he allegedly ignored continued pressure to sign off on the lower figure, the company placed him on a performance improvement plan, threatened his job, maintained strict oversight over his work, and hired a special project CFO to handle several of his major assignments. Nearly four months after his initial refusal, Complainant resigned and brought a SOX whistleblower claim before the DOL.

ALJ’s Ruling. The ALJ ruled in Complainant’s favor and awarded him $1.9 million in back pay, front pay, and compensatory damages. The ALJ determined that although Complainant was never privy to the company’s calculations behind the $4 million number, his purportedly extensive experience supported the reasonableness of his belief that submitting that lower figure would be fraudulent. The ALJ also asserted that “no magic word” exists to put an employer on notice of protected activity and trigger whistleblower protections, so long as the employee identifies the conduct of concern. Thus, according to the ALJ, Complainant’s purported concerns regarding his inability to justify the company’s proffered EBITDA number, even without any concrete mention of fraud or criminality, satisfied the notice element of his SOX whistleblower. The ALJ concluded that Complainant’s purportedly “forced resignation” in the midst of pressure to engage in purportedly improper activity fell within SOX’s broad prohibition on retaliatory adverse actions.

Implications. The size of this award underscores the risks attendant to SOX litigation in any forum, including before ALJs at the DOL.