The Occupational Safety and Health Administration (OSHA) last week issued an interim final rule relating to whistleblower claims under the Sarbanes-Oxley Act (SOX). The rule changes current regulations in two ways. First, it conforms OSHA’s regulations to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act amendments to SOX. Second, the new rule revises the procedures for investigation of SOX complaints to make them more consistent with OSHA’s investigations under other whistleblower statutes administered by the agency, including the Surface Transportation Assistance Act of 1982, the National Transit Systems Security Act, the Federal Railroad Safety Act, the Consumer Product Safety Improvement Act, and the employee protection provisions of six environmental statutes and the Energy Reorganization Act of 1974.
The interim rule includes the following key amendments to the SOX regulations:
- Retaliation protection has been added for employees of nationally recognized statistical rating organizations (as defined by Section 3(a) of the Securities Exchange Act of 1934) or their officers, employees, contractors, subcontractors, or agents.
- The statute of limitations for SOX whistleblower claims has been doubled, from 90 to 180 days.
- Complaints filed under SOX no longer need to be in any particular form, but may be oral or in writing, in any language, and, with the consent of the employee, may be filed by any person on the employee’s behalf.
- Parties now have the right to a jury trial in district court actions brought under SOX’s “kickout” provision, which provides that, if a final decision has not issued within 180 days of the complaint’s filing and there is no showing that there has been delay due to the bad faith of the complainant, the complainant may file suit in federal court.
- Employees may not waive SOX whistleblower claims, even through a pre-dispute employment arbitration agreement.
- OSHA will provide the complainant with a copy of the respondent’s submissions, redacted if necessary, in accordance with applicable confidentiality laws.
- The statutory burdens of proof have been consolidated and require that the complainant make an initial prima facie showing by a “preponderance of the evidence” that protected “whistleblowing” activity was “a contributing factor” in the alleged adverse action. If the complainant does not make the requisite showing, the complaint will be dismissed. If the complainant makes the requisite showing, the burden then shifts to the employer to demonstrate by “clear and convincing” evidence – a higher evidentiary standard – that it would have taken the same adverse action in the absence of protected activity. If the employer makes such a showing, the complaint will be dismissed.
- Interest on back pay and other damages will now be computed by compounding the IRS interest rate for the underpayment of taxes.
- Reinstatement remains a remedy for retaliatory discharges but the new rule removes the statement that reinstatement is not appropriate where the complainant is a security risk, leaving OSHA to determine on a case-by-case basis when reinstatement will be ordered. In lieu of reinstatement, OSHA may now order that the complainant receive “front pay,” continued pay, and benefits for some future period (i.e., an economic reinstatement).
Significantly, many of these amendments are already reflected in OSHA’s new Whistleblower Investigations Manual. To read our previous alert on the new manual, click here. OSHA has requested that public comments on the rule be submitted by January 3, 2012.