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ARTICLES:

The anti-retaliation provisions of Title VIII of H.R. 3673, Sarbanes-Oxley Act of 2002, with notes by Tim about the most interesting passages

I highlighted noteworthy text with red bold
and then made notes as follows: [TJW – ……. commentary ……. ].

Link to full text (PDF file) of Sarbanes-Oxley Act of 2002

SEC. 806. PROTECTION FOR EMPLOYEES OF PUBLICLY TRADED
COMPANIES WHO PROVIDE EVIDENCE OF FRAUD.

(a) IN GENERAL.-Chapter 73 of title 18, United States Code,
is amended by inserting after section 1514 the following:

Ӥ 1514A. Civil action to protect against retaliation in fraud
cases

”(a) WHISTLEBLOWER PROTECTION FOR EMPLOYEES OF PUBLICLY
TRADED COMPANIES.-No company with a class of securities registered
under section 12 of the Securities Exchange Act of 1934
(15 U.S.C. 78l), or that is required to file reports under section
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)),
or any officer, employee, contractor, subcontractor, or agent of such
company, may discharge, demote, suspend, threaten, harass, or
in any other manner discriminate against an employee in the terms
and conditions of employment because of any lawful act done by
the employee-

[TJW – The types of retaliation covered are reasonably broad – that’s good.]

”(1) to provide information, cause information to be provided,
or otherwise assist in an investigation regarding any
conduct which the employee reasonably believes constitutes
a violation of section 1341, 1343, 1344, or 1348, any rule or
regulation of the Securities and Exchange Commission, or any
provision of Federal law relating to fraud against shareholders,

when the information or assistance is provided to or the investigation
is conducted by-

[TJW – The “reasonably believes” language is a giant TRAP in this statute. The employee must know the intricacies of the specific sections of law referenced and be able to persuasively argue that the company appeared to be violating those sections, or else the employee will not get any protection against retaliation under this new law]

”(A) a Federal regulatory or law enforcement agency;

”(B) any Member of Congress or any committee of
Congress; or

”(C) a person with supervisory authority over the
employee (or such other person working for the employer
who has the authority to investigate, discover, or terminate
misconduct);

[TJW – Whistleblower protections apply even if the employee notifies a mere supervisor of the problem. That’s good.]

or

”(2) to file, cause to be filed, testify, participate in, or
otherwise assist in a proceeding filed or about to be filed
(with any knowledge of the employer) relating to an alleged
violation of section 1341, 1343, 1344, or 1348, any rule or
regulation of the Securities and Exchange Commission, or any
provision of Federal law relating to fraud against shareholders.

”(b) ENFORCEMENT ACTION.-
”(1) IN GENERAL.-A person who alleges discharge or other
discrimination by any person in violation of subsection (a) may
seek relief under subsection (c), by-

”(A) filing a complaint with the Secretary of Labor;

[TJW – This is like making an EEOC charge, but you make the charge to the Department of Labor.]

or

”(B) if the Secretary has not issued a final decision
within 180 days of the filing of the complaint and there
is no showing that such delay is due to the bad faith
of the claimant
, bringing an action at law or equity for
de novo review in the appropriate district court of the
United States, which shall have jurisdiction over such an
action without regard to the amount in controversy.

[TJW – Employees do not have the right to sue unless the Department of Labor has taken 180 days and still not reached a decision.]

[TJW – Those words about “bad faith” added a tool for employers to get cases thrown out of court, by arguing that the lawsuit is improper because the employee’s unreasonable conduct somehow caused the Secretary to delay the decision]

[TJW – “De novo review” means lesser rights in court than being able to just sue for the violation. The court might disallow further discovery, for example, beyond the info the agency gathered.]

”(2) PROCEDURE.-
”(A) IN GENERAL.-An action under paragraph (1)(A)
shall be governed under the rules and procedures set forth
in section 42121(b) of title 49, United States Code.

[TJW – That means the complaint will be handled like an Air Carrier whistleblower charge to the Department of Labor. Federal Aviation Admin Whistleblower pages.]

[TJW – It’s unclear in this new statute, but it’s arguable that an employee will be able to file an appeal to the Court of Appeals if the Department of Labor says no retaliation occurred. One of the procedures under the referenced law, 49 USC 42121, allows employees to file a “petition for review” with the Court of Appeals if the Department of Labor dismisses their complaint. In a petition for review, you don’t get to discover new evidence – the court just looks at what the Department did with your complaint.]

”(B) EXCEPTION.-Notification made under section
42121(b)(1) of title 49, United States Code, shall be made
to the person named in the complaint and to the employer.

”(C) BURDENS OF PROOF.-An action brought under
paragraph (1)(B) shall be governed by the legal burdens
of proof set forth in section 42121(b) of title 49, United
States Code.

[TJW – Employee must show the protected activity was a “contributing factor”; employer can defend by showing by “clear and convincing evidence” that it would have made the same decision anyway]

”(D) STATUTE OF LIMITATIONS.-An action under paragraph
(1) shall be commenced not later than 90 days after
the date on which the violation occurs.

[TJW – TRAP – where traditional discrimination laws allow 300 days to complain, this law only allows 90 days.]

”(c) REMEDIES.-
”(1) IN GENERAL.-An employee prevailing in any action
under subsection (b)(1) shall be entitled to all relief necessary
to make the employee whole.

”(2) COMPENSATORY DAMAGES.-Relief for any action under
paragraph (1) shall include-
”(A) reinstatement with the same seniority status that
the employee would have had, but for the discrimination;

”(B) the amount of back pay, with interest; and

”(C) compensation for any special damages sustained
as a result of the discrimination, including litigation costs,
expert witness fees, and reasonable attorney fees.

[TJW – Where’s the punitive damages? They are not allowed under this new law.]

”(d) RIGHTS RETAINED BY EMPLOYEE.-Nothing in this section
shall be deemed to diminish the rights, privileges, or remedies
of any employee under any Federal or State law, or under any
collective bargaining agreement.”.

[TJW – This means you can also sue for wrongful termination under any state’s public policy discharge laws]

(b) CLERICAL AMENDMENT.-The table of sections at the beginning
of chapter 73 of title 18, United States Code, is amended
by inserting after the item relating to section 1514 the following
new item:

”1514A. Civil action to protect against retaliation in fraud cases.”.


***** END OF ARTICLE *****

Timslaw.com Missouri Employment Law

Maintained by Attorney Phil Willoughby
Founded by Tim Willoughby, Esq. (1959-2013)

Phil is a Missouri employment lawyer who is licensed to practice in Kansas and Missouri, and primarily takes cases in Saint Louis and Kansas City. He is a member of the Missouri Bar Association and Kansas Bar Association. Additionally, he has practiced in the United States Federal Courts of Missouri in St. Louis and Kansas City. He has also practiced in the Kansas Federal District Court in Kansas City, Kansas.

Missouri Bar Website (To view the directory of lawyers).

Phil Willoughby, Attorney
Licensed in Missouri and Kansas

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