-
Sarbanes Oxley
whistleblower protection
provisions
- Case
Studies
Welcome to the April 2010 edition of the Sarbanes
Oxley Compliance Professionals Association (SOXCPA)
newsletter
Dear
Members,
Today
we will try to understand better the
Sarbanes Oxley whistleblower protection provisions. Many members believe that
we have this protection only after SOX, but
this is not true.
The
Occupational Safety and
Health Act of 1970 created the Occupational Safety and Health
Administration - OSHA that investigates complaints and
enforces the whistleblower
provisions of Sarbanes-Oxley and 16 other
statutes protecting employees who report violations
of various securities laws; trucking, airline, nuclear power,
pipeline, environmental, rail, and workplace safety and health
regulations; and consumer product safety laws.
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Contents
1.
Risk
Professionals
2.
Compliance
Professionals
3.
Sarbanes
Oxley
Professionals
4.
Basel
ii
Professionals
5.
Solvency
ii
Professionals
6.
Hedge
Funds
Professionals
7. Members of the
Board
of Directors
The whistleblower
protection provision
The
Sarbanes Oxley Act's whistleblower protection provision
is encouraging employees of publicly traded companies to disclose
information that they reasonably believe indicates federal
securities violations or various forms of fraud, including fraud
against shareholders.
Employees of publicly traded companies
and contractors, subcontractors, and agencies of publicly traded
companies are protected.
A
complaint must be filed with the Department of Labor in writing
within 90 days of the time an employee
learns that he or she will be, or has been, subjected to
discrimination, harassment, or retaliation.
The
complaints should be be filed at:
U.S. Department of Labor
Office of the Assistant Secretary
Occupational Safety and
Health Administration - Room: S2315
200 Constitution Avenue
Washington, D.C. 20210
U.S. Department of Labor
Occupational Safety and Health Administration (OSHA)
The Occupational Safety and Health Act of 1970 created the
Occupational Safety and Health Administration to help employers
and employees reduce injuries, illnesses and deaths on the job in
America.
Since
then, workplace fatalities have been cut by more than 60 percent
and occupational injury and illness rates have declined 40
percent. At the same time, U.S. employment has more than doubled
and now includes over 115 million workers at 7.2 million
worksites.
Your Rights
as a Whistleblower
You may file a complaint with OSHA if your employer retaliates
against you by taking unfavorable personnel action because you
engaged in protected activity relating to workplace safety and
health, commercial motor carrier safety, pipeline safety, air
carrier safety, nuclear safety, the environment, asbestos in
schools, corporate fraud, SEC rules or regulations, railroad
carrier safety or security, or public transportation agency safety
or security.
Whistleblower Laws Enforced by OSHA
Each law requires that complaints be filed within a certain
number of days after the alleged retaliation.
You may file
complaints by telephone or in writing under the:
•
Occupational Safety and Health Act (30 days)
•
SurfaceTransportation Assistance Act (180 days)
• Asbestos
Hazard Emergency Response Act (90 days)
• International
Safe Container Act (60 days)
• Federal Rail Safety Act (180
days)
• NationalTransit Systems Security Act (180 days)
Under the following laws, complaints must be filed in writing:
• Clean Air Act (30 days)
• Comprehensive Environmental
Response, Compensation and Liability Act (30 days)
• Energy
Reorganization Act (180 days)
• FederalWater Pollution
Control Act (30 days)
• Pipeline Safety Improvement Act
(180 days)
• Safe DrinkingWater Act (30 days)
• Sarbanes-Oxley Act (90 days)
• SolidWaste Disposal Act (30 days)
• Toxic Substances
Control Act (30 days)
• Wendell H. Ford Aviation Investment
and Reform Act for the 21st Century (90 days)
Unfavorable Personnel Actions
Your employer may be found to have retaliated against you if
your protected activity was a contributing or motivating factor in
its decision to take unfavorable personnel action against you.
Such actions may include:
•
Firing or laying off
• Blacklisting
• Demoting
• Denying
overtime or promotion
• Disciplining
• Denying benefits
•
Failing to hire or rehire
• Intimidation
• Reassignment
affecting promotion prospects
• Reducing pay or hours
Filing a Complaint
If
you believe that your employer retaliated against you because you
exercised your legal rights as an employee, contact your local
OSHA office as soon as possible, because you must file your
complaint within the legal time limits.
OSHA conducts an
in-depth interview with each complainant to determine whether to
conduct an investigation. For more information, call your closest
OSHA Regional Office
• Boston (617) 565-9860
• NewYork
(212) 337-2378
• Philadelphia (215) 861-4900
• Atlanta (404)
562-2300
• Chicago (312) 353-2220
• Dallas (972) 850-4145
• Kansas City (816) 283-8745
• Denver (720) 264-6550
• San
Francisco (415) 625-2547
• Seattle (206) 553-5930
How OSHA Determines Whether
Retaliation Took Place
The investigation must reveal that:
• The employee engaged in protected activity;
• The employer knew about the protected activity;
• The
employer took an adverse action; and
• The protected activity
was the motivating factor (or under some laws, a contributing
factor) in the decision to take the adverse action against the
employee.
If the evidence
supports the employee’s allegation
and a settlement cannot be
reached, OSHA will issue
an order requiring the employer to
reinstate the
employee, pay back wages, restore benefits, and
other possible remedies to make the employee whole.
Whistleblower Protections When
Reporting Corporate Fraud
Employees who work for publicly traded companies or companies
required to file certain reports with the Securities and Exchange
Commission are protected from retaliation for reporting alleged
mail, wire, or bank fraud; violations of rules or regulations of
the SEC, or federal laws relating to fraud against shareholders.
Who OSHA Covers
Private Sector Workers
Most employees in the nation come
under OSHA’s jurisdiction. OSHA covers private sector employers
and employees in all 50 states, the District of Columbia, and
other U.S. jurisdictions either directly through Federal OSHA or
through an OSHA-approved state program. State run health and
safety programs must be at least as effective as the Federal OSHA
program. To find the contact information for the OSHA Federal or
State Program office nearest you, see the Regional and Area
Offices map.
State and Local Government Workers
Employees who work for state
and local governments are not covered by federal OSHA, but have
OSH Act protections if they work in those states that have an
OSHA-approved state program. Four additional states and one U.S.
territory have OSHA approved plans that cover public sector
employees only. This includes: Connecticut, Illinois, New Jersey,
New York, and the Virgin Islands. Private sector workers in these
four states and the Virgin Islands are covered by federal OSHA.
Federal Government Workers
Federal agencies must have a safety and
health program that meet the same standards as private employers.
Although OSHA does not
fine federal agencies, it does monitor federal agencies and
responds to workers’ complaints. The United States Postal Service
(USPS) is covered by OSHA.
Who is not covered by the OSH Act:
Self employed;
Immediate
family members of farm employers that do not employ outside
employees; and
Workers who are protected by another Federal
agency (for example the Mine Safety and Health Administration,
FAA, Coast Guard).
Recent Case Study 1
US Labor Department orders
Tennessee Commerce Bank to reinstate whistleblower and pay more
than $1 million in back wages and other relief
Bank found in violation of whistleblower protection
provisions.
NASHVILLE, Tenn. --
The U.S. Department of Labor's Occupational
Safety and Health Administration has ordered Tennessee Commerce
Bank in Nashville to reinstate a former corporate officer and pay
more than $1 million in back wages,
interest, attorney's fees, compensatory damages and other relief.
The
department found the bank had fired the
individual in violation of the whistleblower protection provisions
of the Sarbanes-Oxley Act of 2002.
"Sarbanes-Oxley provides protection to workers who report
alleged violations of mail, wire, bank or securities fraud;
violations of rules or regulations of the Securities and Exchange
Commission; or federal laws relating to fraud against
shareholders," said Assistant Secretary of Labor for OSHA Dr.
David Michaels.
"This
case clearly shows the department's commitment to ensuring that
individuals are provided the protections and relief afforded by
the law and sends a strong message that retaliatory actions will
not be tolerated."
A complaint filed with OSHA in April
2008 named Tennessee Commerce Bank and Tennessee Commerce Bancorp
Inc. as defendants.
The
complaint alleged that the employee was placed on administrative
leave in March 2008 and fired in May 2008 after raising concerns
about internal controls, employee accounts, insider trading and
other issues.
The
complainant first raised concerns to the bank's audit committee
and later to the Federal Deposit Insurance Corp. and the Tennessee
Department of Financial Institutions.
OSHA investigated the
complaint as part of its responsibilities
to enforce the whistleblower provisions of
Sarbanes-Oxley and 16 other statutes protecting employees
who report violations of various securities
laws; trucking, airline, nuclear power, pipeline, environmental,
rail, and workplace safety and health regulations; and consumer
product safety laws.
Fact
sheets and detailed information on employee whistleblower rights
are available online at
http://www.osha.gov/dep/oia/whistleblower/index.html
Either
party to the case may file objections and/or request a hearing
before the Labor Department's Office of Administrative Law Judges
within 30 days, but such an appeal does not stay the preliminary
reinstatement order.
Under the numerous whistleblower
provisions enacted by Congress,
employers are prohibited from retaliating against employees
who raise various protected concerns or provide protected
information to the employer or to the government. Employees who
believe that they have been retaliated against for engaging in
protected conduct may file a complaint with the secretary of labor
for an investigation by OSHA's Whistleblower Protection Program.
Recent Case Study 2
US Department of Labor's OSHA orders
e-Smart Technologies Inc. to pay whistleblower back wages and
$600,000 in compensatory damages
Agency orders company to reinstate California worker
SAN FRANCISCO -- The U.S. Department of Labor's Occupational
Safety and Health Administration has ordered e-Smart Technologies
Inc. to pay back wages with interest
and approximately $600,000 in
compensatory damages to a California worker who was discharged
after raising concerns about misinformation contained in a draft
public filing.
OSHA
also ordered the company to reinstate
the whistleblower to his former position.
"It is vital that employees be able to raise fraud concerns to
their employers without fear of retaliation," said Assistant
Secretary of Labor for OSHA Dr. David Michaels.
"This
order reaffirms both the right of employees to raise concerns
regarding violations of Securities and Exchange Commission rules
and the Labor Department's commitment to protecting that right."
The action resulted from a whistleblower investigation
conducted by OSHA's regional office in San Francisco
under the whistleblower protection provisions
of the Sarbanes-Oxley Act of 2002.
The
investigation substantiated the employee's complaint that his job
duties were systematically removed and his paychecks were delayed
and ultimately stopped after he questioned the accuracy of several
statements made in the company's Securities and Exchange
Commission filings.
In addition to requiring e-Smart
Technologies to fairly compensate and rehire the whistleblower,
OSHA's order instructs the company to provide a neutral reference,
expunge his personnel file of any reference to his exercise of
rights under the Sarbanes-Oxley Act and post a notice to employees
outlining whistleblower protections.
E-Smart Technologies is a registered Nevada corporation with an
office in New York. The company or complainant may file objections
or request a hearing before the Labor Department's Office of
Administrative Law Judges within 30 days.
Recent Case Study 3
US Department of Labor secures back
wages for fired whistleblower in Corpus Christi, Texas
CORPUS CHRISTI, Texas — A former employee of Corpus
Christi-based Orion Drilling Co., fired after complaining to
management about being exposed to mold in the workplace,
has been paid $10,000 in back wages as a
result of a settlement secured by the U.S. Department of Labor.
The former employee, who served as a crew member on a drilling
rig, complained to management about being exposed to mold in the
crew members' living quarters.
After
being fired, the former employee filed a complaint with the
department's Occupational Safety and Health Administration (OSHA)
alleging a violation of the whistleblower provisions of the
Occupational Safety and Health (OSH) Act of 1970.
OSHA's
investigation found merit to the complaint.
After OSHA
informed the employer of its preliminary finding and referred the
case to the Labor Department's Office of the Solicitor for
enforcement, the employer elected to settle the case.
In
addition to paying the complainant the $10,000 in lost wages, the
settlement agreement requires the employer to post a notice in the
workplace informing employees of their rights under the OSH Act
and to purge all derogatory or negative statements from the fired
employee's personnel file.
"Employees should be free to exercise their rights under the law
without fear of retaliation by their employers," said Dean
McDaniel, OSHA's regional administrator in Dallas, Texas.
"This
settlement underscores the Labor Department's commitment to
vigorously take action to protect worker rights."
NEWS
QUESTION
How can the Obama Administration and Congress restore
investor confidence?
ANSWER OF MICHAEL OXLEY TO FORTUNE (MARCH
2010)
We need to figure out
financial reform. In the wake of AIG and Lehman, it's very
difficult today to make the case that the market will take care of
itself and that we don't need a lot of transparency or even a
minimal regulatory structure.
(Congressmen Paul Sarbanes of
Maryland and Michael Oxley of Ohio crafted SOX, which
was enacted in 2002. Michael Oxley is now working at law firm
Baker Hostetler in D.C.)
Dear
member,
Thank you for reading our
monthly newsletter.
Take advantage of the distance learning
and online certification program of
the Association at a cost that
is unheard of.
You may visit:
www.sarbanes-oxley-association.com/Distance_Learning_and_Certification.htm
Best
Regards,
George Lekatis
President of the Sarbanes Oxley
Compliance Professionals Association
General Manager, Compliance
LLC
1200 G Street NW Suite 800, Washington DC 20005, USA
Tel: (202) 449-9750
Email:
lekatis@sarbanes-oxley-association.com
Web:
www.sarbanes-oxley-association.com
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