DOL Revises SOX Whistleblower Rules To Reflect Changes Made by Dodd-Frank

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By Kevin P. McGowan

The Labor Department's Occupational Safety and Health Administration has issued an interim final rule revising its existing regulations under the Sarbanes-Oxley Act's whistleblower provisions to reflect the changes made by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted in July 2010.

Published in the Nov. 3 Federal Register (76 Fed. Reg. 68,084), the new rule incorporates the substantive changes made by the Dodd-Frank legislation, improves the procedures for handling SOX Act whistleblower complaints, and makes the SOX Act whistleblower regulations more consistent with OSHA's rules for administering other whistleblower programs, OSHA said.

OSHA is soliciting public comments on the interim final rule, which took effect upon publication in the Federal Register. Comments must be submitted within 60 days of publication. A final rule will be published after OSHA receives and reviews such comments, the agency said.

Changes Brought About by Dodd-Frank.

The Dodd-Frank Act amended the SOX Act whistleblower provisions by adding protection for employees against retaliation by nationally recognized statistical rating organizations; by extending from 90 to 180 days the statutory filing period for retaliation complaints; by providing SOX Act claimants with the right to jury trials in district court if the secretary of labor does not act on their complaints within 180 days of filing; and by providing that employees cannot waive SOX Act whistleblower rights, including through a predispute arbitration agreement.

The Dodd-Frank Act clarified that the SOX Act whistleblower provisions apply to any company with a class of securities registered under Section 12 of the Securities and Exchange Act or that is required to file reports under Section 15(d) of the federal securities statute, OSHA said in an introduction to the interim final rule.

Dodd-Frank also clarified that subsidiaries and affiliates of companies meeting the SEC filing criteria are covered by the SOX Act whistleblower provisions, OSHA said.

New Terminology.

The interim final rule makes some nonsubstantive changes in terminology, as OSHA now will refer to SOX Act whistleblower cases as ones alleging “retaliation” rather than “discrimination,” the “named persons” who allegedly retaliated will be called “respondents,” and the allegedly retaliatory actions formerly called “unfavorable personnel actions” will be called “adverse actions.”

The updated terms track the wording already used by OSHA in handling whistleblower complaints under several other statutes within its jurisdiction, the agency said. “The minor changes here create consistency with these other programs and reduce possible confusion,” OSHA said.

The interim final rule also replaces the term “company representative” with “covered person,” which includes “any company” and recognizes that entities beyond an individual's employer, such as a national statistical rating agency and its officers, may be liable for retaliation, OSHA said.

“These changes in terminology also continue to reflect that Sarbanes-Oxley's statutory provisions identify individuals, as well as the employer, as potentially liable for retaliation,” the agency said. “OSHA continues to anticipate, however, that in most cases the ‘covered person' and the ‘respondent' likely will be the complainant's employer.”

The new rule's definitions “also continue to reflect OSHA's longstanding position that the statute protects both employees of publicly traded companies and employees of contractors, subcontractors, and agents of publicly traded companies,” the agency said.

Oral and Representative Complaints Allowed.

OSHA's new rule changes Section 1980.103 of the regulations to reflect the longer limitations period for filing a complaint, now within 180 days after the alleged retaliation occurred or after the date the complainant became aware of the violation.

OSHA also amended this section to change its previous requirement that SOX Act whistleblower complaints must be in writing and include a “full statement of the acts and omissions, with pertinent dates, which are believed to constitute the violations.”

Under the new rule, consistent with OSHA's approach to other whistleblower programs, SOX Act complaints “need not be in any particular form” and can be made orally or in writing, the agency said. If a complainant is unable to file in English, “the complaint may be filed in any language,” and with the employee's consent, “a complaint may be filed by any person on the employee's behalf,” OSHA said.

These amendments are consistent with DOL Administrative Review Board decisions permitting oral complaints under other whistleblower statutes, as well as with Kasten v. Saint-Gobain Perf. Plastics Corp. (131 S.Ct. 1325, 17 WH Cases2d 577 (2011)), in which the U.S. Supreme Court held an employee's oral complaint was protected activity under the Fair Labor Standards Act (29 HRR 313, 3/28/11), OSHA said.

Burdens of Proof, Remedies Addressed.

Once a complainant proves by a “preponderance of the evidence” that his protected activity contributed to an adverse action, “the employer can escape liability only by proving by clear and convincing evidence that it would have reached the same decision even in the absence of the prohibited rationale,” OSHA said. “The ‘clear and convincing evidence' standard is a higher burden of proof than a ‘preponderance of the evidence' standard.”

The new rule removes a statement in the prior regulations that reinstatement would not be appropriate where the respondent establishes the complainant is a security risk. Instead, OSHA said a determination whether reinstatement is inappropriate “is best made on the facts of each case and relevant case law, and thus it is not necessary in these procedural rules to define the circumstances in which reinstatement is not a proper remedy.”

OSHA added that in lieu of “preliminary reinstatement,” the agency may order that a complainant receive the same pay and benefits that he received prior to his termination, but not actually return to work.

Comments may be submitted at, faxed to the OSHA Docket Office at (202) 693-1648, or mailed or hand-delivered to: OSHA Docket Office, Docket No. OSHA-2011-0126, U.S. Department of Labor, Room N-2625, 200 Constitution Ave. N.W., Washington, D.C. 20210.

For further information, contact Sandra Dillon, Acting Director, Office of the Whistleblower Protection Program, Occupational Safety and Health Administration, U.S. Department of Labor, Room N-3610, 200 Constitution Ave. N.W., Washington, D.C. 20210; (202) 693-2199.

By Kevin P. McGowan

Text of OSHA's interim final rule may be accessed at .