After issuing an Interim Final Rule over three years ago, and receiving and considering public comments on the interim rule, the Occupational Safety and Health Administration has issued its Final Rule governing whistleblower claims under Section 806 of the Corporate Fraud Accountability Act of 2002, a part of the Sarbanes-Oxley Act of 2002 (SOX). The Final Rule implements the procedures and timelines for handling whistleblower complaints under SOX, which was necessitated by amendments to SOX by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Final Rule became effective March 5, 2015.
Generally speaking, SOX protected employees of public companies who report conduct that they reasonably believe constitutes a violation of federal law pertaining to financial, securities, or shareholder fraud. The Final Rule, like the interim rule, provides that an employee is protected against retaliation by a “covered person” ––that is, companies, their agents, officers, affiliates or subsidiaries, or any statistical rating organization––for providing information or assisting in an investigation regarding conduct which the employee “reasonably believes constitutes a violation of 18 U.S.C. 1341 (mail fraud), 1343 (wire fraud), 1344 (bank fraud), or 1348 (securities fraud), any rule or regulation of the Securities and Exchange Commission.” Additionally, the Final Rule implements, in accordance with Dodd-Frank, a statute of limitations of 180 days for filing a complaint of retaliation.
Under the Final Rule, once a complaint of retaliation is filed (which can be made orally or filed online), OSHA will conduct an investigation into the substance of the complaint, which will be dismissed unless the complainant has made a prima facie showing that protected activity was a contributing factor in the adverse action alleged. Even if a complainant makes a prima facie showing, an investigation will not be conducted if the company demonstrates by clear and convincing evidence that it would have taken the same adverse action in the absence of the complainant’s protected activity. Following the investigation, OSHA will issue a preliminary order.
The Final Rule also sets forth the procedures parties must use in objecting to a preliminary order by OSHA, as well as seeking review of OSHA’s preliminary order by an Administrative Law Judge, review of the ALJ’s decision by the Administrative Review Board, and judicial review of a final order by the Administrative Review Board.
Because the Final Rule closely tracks the interim Final Rule, which has provided similar procedures for filing and litigating SOX whistleblower claims for over three years, employers should not expect any immediate significant changes in the handling of these types of claims. However, the Final Rule demonstrates that SOX whistleblower claims are here to stay and employers should familiarize themselves with SOX’s whistleblower provisions.