Blowing the Whistle -- Corporate Securities Fraud

The Sarbanes-Oxley Act

The Sarbanes-Oxley Act ["SOX"] is a federal law generated from the Enron debacle. It includes a "whistleblower" protection statute. The law applies only to publicly traded companies.
The type of resistance or protest protected by SOX is the "providing of information" to a "person with supervisory authority" over the employee. The information must consist of facts the employee "reasonably believes" is evidence of fraudulent corporate activity that will materially affect shareholder value. Of course, the same protection applies if the employee transmits the information to a government agency, such as the S.E.C. (Securities & Exchange Commission).
The Act requires an employee harassed or fired because of whistleblowing activity to file an administrative complaint within 90 days of the adverse employment action. The complaint is filed with the Department of Labor, Division of Occupational Safety and Health (OSHA). The Employer has 20 days to file a response. Both sides are expected to present "evidence" such as declarations and documents during this phase.
OSHA has 180 days to act on the complaint (by investigating and referring for hearing), or to issue a "right to sue" letter permitting the case to proceed to federal court.
If the employee is harassed, demoted, or fired, an Administrative Law Judge has the power to reinstate the employee's employment, award back-pay, and attorney's fees.

What You Can Do

The time frame to file a complaint is very short. You should act quickly to seek legal counsel. The complaint itself can be informal and basic as the first information to the Department of Labor. Forms are available on the Department's website for online filing, and if you are nearing the deadline, do not delay in filing, even without the assistance of counsel. This link will guide you through the process:

OSHA Complaint Procedure in SOX cases.

Conclusion

I learned some "insider" tricks at this conference that I can use in future cases. Among other matters, I learned that Administrative Law Judges can and often do reinstate the employee to his former job as a "provisional remedy" even while the OSHA investigation is proceeding. [This remedy is just not available in federal court cases]. The prospect of an unwanted employee being back on the job is a great incentive for an employer to consider an early settlement. I also learned that the employee need only "provide information", that is, a "complaint" is not a condition of a whistleblower case. An employee cooperating with an internal investigation or audit, for example, who is not motivated to "blow the whistle" is just as protected as a "crusader".

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