WHISTLEBLOWER PROTECTIONS UNDER THE SARBANES-OXLEY ACT: A PRIMER AND A CRITIQUE

Fordham Journal of Corporate & Financial Law, 2007 by Watnick, Valerie

The procedures further provide that a "[c]omplaint will be dismissed if it fails to make a prima facie showing that protected behavior or conduct was a contributing factor in the unfavorable personnel action alleged in the complaint."31

The initial procedures only require a complainant to raise an inference that his protected conduct was a contributing factor in the employer's decision.32 If he does this, then an investigation of the claim will proceed unless the employer can show by clear and convincing evidence that it had a legitimate, non-discriminatory reason for terminating the complainant.33 Since the Sarbanes-Oxley administrative procedure was designed to be an expedited proceeding,34 the rules state that a Respondent has 20 days from receipt of the complaint to meet with OSHA and present evidence in support of its position.35 The procedures do not provide for the OSHA investigator to share this evidence with the complainant. ,36 If the OSHA investigator has "reasonable cause" to believe that the "named person [the respondent employer] has violated the Act and therefore that preliminary relief for the complainant is warranted, OSHA again contacts the named person with notice of this determination."37 The rules then require that the named person be given ten business days to provide written evidence, meet with the investigator and provide legal and factual arguments against a preliminary award of relief.38 Again, the procedures do not give the complainant a commensurate right to meet with the OSHA investigator or to provide written evidence arguing in favor of a preliminary award for relief.39

Within 60 days of the filing of the complaint, the investigator is to make a determination on behalf of the Assistant Secretary that either preliminary relief is warranted, or the complaint lacks merit.40 If the Assistant Secretary determines that preliminary relief is warranted, he may order that the employee be reinstated.41 Either party may file objections to the preliminary determination of the Assistant Secretary within 30 days of receipt of the investigator's findings and request a hearing before an administrative law judge ("ALJ").42

At the hearing on the objections to the preliminary determination of the Assistant Secretary, an employee bringing a Sarbanes-Oxley whistleblower claim must ultimately show by a preponderance of the evidence43 that: (1) he engaged in protected activity under SarbanesOxley; (2) that the employer was aware of the protected activity; (3) that he suffered an adverse employment action; and (4) that the protected activity was likely a contributing factor in the employer's decision to take adverse action.44 Since there is seldom direct evidence of discrimination against a whistleblower, whistleblowing employees may prove a nexus between the protected activity and the adverse employment action inferentially.45

After a hearing, the ALJ will issue a decision in the matter and that decision will become the final decision of the Secretary of Labor unless a timely petition for review is filed with the Administrative Review Board ("ARB").46 Sarbanes-Oxley further provides that if the Secretary of Labor has not issued a final decision within 1 80 days of the initial filing by the employee, the employee may bring an appropriate action for de novo review and appropriate relief in federal court.47