It is natural (and logical) to assume that United States laws do not apply to an individual’s actions in another country. Although this is not always the case — federal discrimination laws, for example, cover U.S. citizens employed by U.S. employers in a foreign country — one would usually expect that conduct is governed by the law of the country where the alleged violation occurred. A recent Department of Labor Administrative Review Board (“ARB”) decision, however, held that Sarbanes-Oxley’s (“SOX”) whistleblower protections may also apply to employees stationed outside the United States.
In Blanchard v. Exelis Systems Corp./Vectrus Systems Corp., ARB Case No. 15-031 (August 29, 2017), the ARB allowed a whistleblower’s claim under SOX stemming from his employer’s alleged mail and wire fraud to go forward despite the fact that both the company and the employee were operating in Afghanistan in connection with an engagement by the U.S. government. The employee was fired shortly after raising concerns that certain employees had misreported their hours and allowed another employee to illegally enter the country, which the whistleblower believed to be mail or wire fraud. Even though the activity happened outside the United States, the ARB reversed the Administrative Law Judge’s (“ALJ”) dismissal of the complaint and remanded the issue to the ALJ because the complaint alleged a violation of U.S. law by a U.S. company, and nothing in it implicated Afghani law.
Although the employer in this case may ultimately escape liability on the question of whether it violated SOX’s whistleblower protections — or the ARB’s finding could be reversed on appeal — employers should not ignore potential whistleblower claims from employees working abroad. When considered along with other recent developments in this area, such as the position the U.S. government recently took when it intervened in a False Claims Act case against an English clothing retailer, it is clear that employers should reevaluate their retaliation and whistleblower policies, procedures, and training in overseas operations. Employers should review internal reporting requirements and ensure that they have effective internal reporting and investigation procedures in place for their overseas locations to ensure that, if SOX applies to those operations, they are ready to comply with it.