Outten & Golden: Empowering Employees in the Workplace

Sarbanes Oxley Whistleblower Protection Law at 15 Years: Know Your Rights

August 3rd, 2017 | Jason Zuckerman

In the wake of Enron and other corporate scandals that wiped out retirement savings and left millions unemployed, Congress enacted the Sarbanes-Oxley Act (SOX), which contains a robust whistleblower protection provision.  The whistleblower provision is intended to combat a “corporate code of silence,” which “discourage[d] employees from reporting fraudulent behavior not only to the proper authorities, such as the Federal Bureau of Investigation and the SEC, but even internally.”  Congress sought to empower whistleblowers to serve as an effective early warning system and help prevent corporate scandals.

Congressional hearings about the Enron scandal probed why such a massive fraud was not detected earlier.  The testimony and documents revealed that when employees of Enron and its accounting firm, Arthur Andersen, attempted to report corporate misconduct, they faced retaliation, including discharge.  And essentially no legal protection existed for whistleblowers, such as Sherron Watkins, who tried to stop the fraud.

Fifteen years after Congress enacted SOX, internal whistleblowers remain the best source of fraud detection.  But corporate whistleblowers continue to suffer retaliation, and, therefore, widespread fear of retaliation persists.  A survey performed by the Ethics Resource Center found that nearly half of employees observe misconduct each year, and one in five employees who reports misconduct perceives retaliation for doing so.

SOX provides robust protection to corporate whistleblowers, and indeed some SOX whistleblowers have achieved substantial recoveries.  Earlier this year, a former in-house counsel at a biotechnology company recovered $11 million in a SOX whistleblower retaliation case alleging that the company fired him for disclosing violations of the Foreign Corrupt Practices Act.

On the fifteenth anniversary of SOX, whistleblower law firm Zuckerman Law released a free guide to the SOX whistleblower protection law: “Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.”  The guide summarizes SOX whistleblower protections and offers concrete tips for corporate whistleblowers based on lessons learned during years of litigating SOX whistleblower cases.  Workplace Fairness also has a summary of corporate whistleblowers available here.

The goal of the guide is to arm corporate whistleblowers with the knowledge to effectively combat whistleblower retaliation, avoid the pitfalls that can weaken a SOX whistleblower case, and formulate an effective strategy to obtain the maximum recovery.  In particular, the guide addresses key issues for corporate whistleblowers to consider when they experience retaliation due to their protected whistleblowing:

  • What disclosures are protected under SOX?
  • What types of retaliation are prohibited under SOX?
  • Can a whistleblower sue an individual under SOX?
  • Is a whistleblower’s motive for engaging in protected activity relevant in a whistleblower-protection case?
  • Does SOX prohibit employers from “outing” confidential whistleblowers?
  • What is a whistleblower’s burden to prove retaliation under SOX?
  • What damages can a whistleblower recover under SOX?

Lead author Zuckerman commented, “Whistleblowers put a lot on the line when they expose wrongdoing, and they deserve an effective remedy to combat retaliation.  Hopefully this guide will help whistleblowers do the right thing and keep their jobs.  And for whistleblower that have suffered retaliation, the guide can help them explore options to hold their employers accountable.”

About the Author: Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, discrimination, non-compete, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2007 and 2009 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.

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