A whistleblower who took sensitive company data from his employer and turned it over to the IRS has won his retaliation claim at the Department of Labor under the Sarbanes-Oxley Act’s (“SOX”) whistleblower protection provisions. In Vannoy v. Celanese Corp., ALJ Case No. 2008-SOX-00064, ARB Case No. 09-118 (ALJ July 24, 2013), an Administrative Law Judge was presented with the question of whether Vannoy’s removal of highly sensitive company data and transmission of that data to the IRS constituted protected activity under SOX. Vannoy, who was formerly employed as the administrator of Celanese’s corporate credit card program, first allegedly complained internally that the company “misstated their financial records and underestimated their required tax burden potentially in millions.” Vannoy sought legal counsel and eventually reported the company’s alleged accounting misconduct to the IRS. Read More
On Tuesday, June 4th, the Tenth Circuit Court of Appeals issued its first decision interpreting the Sarbanes Oxley Act’s whistleblower protection provision, affirming a decision by the U.S. Department of Labor’s Administrative Review Board (“ARB”), which held that Lockheed Martin violated SOX by constructively discharging employee Andrea Brown after she had engaged in protected activity. The court applied Chevron deference to the ARB’s employee-friendly interpretations of SOX’s requirements. Read More
In Spinner v. David Landau and Associates, LLC, the Department of Labor’s Administrative Review Board (“ARB”) held that an accountant for a private firm was a covered employee under SOX where the firm performed services for publicly traded clients. In so holding, the ARB rejected the First Circuit’s contrary interpretation of SOX in Lawson v. FMR LLC. The Spinner decision provides new ammunition for employees of non-public companies seeking to bring SOX whistleblower claims against their firms and raises significant liability concerns for firms that have operated under the assumption that their employees were not covered by SOX’s whistleblower provisions. Read More
A new opinion from the Department of Labor (“DOL”) makes clear that the department will treat the burden of proof in whistleblower retaliation claims under the Sarbanes-Oxley Act (“SOX”) differently from typical retaliation claims under Title VII. In an opinion issued in late March – Zinn v. American Commercial Lines Inc. – the DOL’s Administrative Review Board (“ARB”) reversed an administrative law judge’s decision that applied Title VII’s “burden shifting” framework to dismiss Zinn’s whistleblower retaliation claim. Specifically, the ARB removed the third prong of the traditional “burden shifting” analysis as discussed further below.
Under Title VII, once an employee makes a prima facie case of retaliation, the burden shifts to the employer to provide a legitimate non-retaliatory reason for taking the adverse employment action at issue in the case. If an employer provides such a reason, the burden then shifts back to the employee to show that the employer’s reasons were actually a pretext for retaliation. In Zinn, the ARB found it was incorrect to apply this framework and “conflat[e] the SOX burden of proof standard with the Title VII burden of proof.” Under SOX, the employee needs to show that she engaged in protected activity that contributed to an adverse employment action. The burden then shifts to the employer to demonstrate, by clear and convincing evidence, that it would have taken the same adverse action absent the protected activity. However, the ARB clarified that it was unnecessary for the employee to then show that the employer’s actions were pretextual. Instead, once an employer produces evidence to support that its actions were non-retaliatory, an administrative law judge should “weigh the circumstantial evidence as a whole” to “gauge the context of the adverse action in question” and determine whether the case should proceed. With this distinct standard and its rejection of the familiar Title VII framework, the DOL has made it evident that SOX whistleblower cases will continue to be a unique and developing area of employment law.