Mike Delikat

Partner

New York


Read full biography at www.orrick.com
Michael Delikat, a partner in the New York office, was the previous Chair of Orrick's Global Employment Law Practice for over twenty years, which has employment law teams in the European Union, Asia as well as the United States.

He also is the founder of the firm’s Whistleblower Task Force. He previously served as the Managing Director of Orrick’s Litigation Division.

Under Mike's leadership, Orrick’s Employment Law & Litigation group was recently named Labor & Employment Department of the Year in California for the fourth consecutive year by The Recorder, the premier source for legal news, in recognition of their significant wins on behalf of leading multinational companies on today’s most complex and challenging employment law matters. The practice group has also been chosen as one of the top national employment law practices by Law 360. Chambers USA and Chambers Global has ranked him in Band 1 since it began publishing its rankings, noting he is a "giant of the employment bar, widely regard as an expert in whistleblowing matters and sex harassment claims","sought out by premier clients to handle high-stakes employment litigation and investigations," and "a very persuasive advocate who knows the law inside out and is able to get to the heart of the issue very quickly."

He represents a broad range of major corporations and other institutions including law firms in all facets of labor and employment law. Mike has an active trial, arbitration and appellate practice and handles a number of high-visibility class action and impact cases. 

Posts by: Mike Delikat

How Much is Too Much? Whistleblower Bar Challenges the SEC’s Recent Whistleblower Program Amendments

On January 13, 2021, prominent whistleblower attorney and a principal architect of the Dodd-Frank Act whistleblower program, Jordan A. Thomas, filed a complaint against the U.S. Securities and Exchange Commission (“SEC” or “Commission”) seeking a declaratory judgment that certain provisions of the SEC’s recent whistleblower program amendments are invalid and cannot be enforced.  Specifically, the complaint challenges the SEC’s “clarification” of its authority to limit the size and number of certain whistleblower awards.

Under Dodd-Frank, the Commission pays a monetary award to a whistleblower that provides information to the SEC that leads to an enforcement action in an amount equal to but not less than 10% and not more than 30% of the monetary sanctions imposed by the SEC. Under Rule 21-F6, the agency calculates whistleblower awards in that 10-30% range by assigning an award percentage based on an array of positive and negative factors. The SEC then issues an award by multiplying the award percentage by the total monetary sanctions that the SEC collected.

Under the whistleblower program, awards in a single enforcement action as high as $114 million have been paid.  Thomas states that his clients have received some of the largest whistleblower awards in history, with three of his clients’ cases involving monetary sanctions in excess of $100 million.

The SEC voiced concerns in 2018 that excessively large awards could deplete the Investor Protection Fund. As a result, the SEC originally proposed a revised Rule 21F-6 in 2018 that would have expressly provided the Commission with the ability to make downward adjustments in connection with large awards where the monetary sanctions equaled or exceeded $100 million as long as the award payout did not fall below $30 million. However, the SEC ultimately scrapped the proposed rule and instead clarified in the new rules that it has always had the authority and discretion to consider the total dollar payout when applying the award criteria and adjust downward for large awards as reasonably necessary.

In addition, under the prior Rule 21F-3, the SEC would pay awards based on amounts collected in “related actions” and defined “related action” as a “judicial or administrative action that is brought by [specified agencies or self-regulatory organizations], and . . . based on the same original information that the whistleblower voluntarily provided to the Commission.” The SEC’s recent amendments revised Rule 21F-3 to award information provided in a “related action” “only if the Commission finds . . . that its whistleblower program has the more direct or relevant connection to the action.” Further, the Final Rule 21F-3 prevents whistleblowers from receiving an award if they have already been granted an award by another agency or if they have been denied an award by another agency’s whistleblower program.

According to Mr. Thomas’s complaint, the previous rules encouraged whistleblowers to come forward by guaranteeing that those individuals who acted properly would be awarded accordingly and would not have their awards unfairly and arbitrarily diminished.  In his complaint, he argues that this “clarification” to Rule 21F-6 is unlawful under the Administrative Procedure Act (“APA”) for at least five reasons: (1) the Final Rule was not a “logical outgrowth” of the proposed rule; (2) the SEC enacted the rule without acknowledging that it was changing its position; (3) the SEC failed to weigh the costs and benefits of the Final Rule; (4) the SEC adopted the rule without providing a reasoned explanation and despite the harms it will cause the whistleblower program; and (5) the SEC had no statutory authority to enact the rule. Furthermore, the complaint alleges the amendments to Rule 21F-3 are unlawful under the APA because (1) the SEC had no statutory authority to enact the changes and (2) the SEC adopted the rule without providing a reasoned explanation and despite the harms it will cause the whistleblower program.

As the complaint asserts, “[T]he potential for large monetary awards is the primary motivation for individuals to blow the whistle to law enforcement and regulatory authorities” and the challenged rule amendments “turn[] the Commission into a kind of casino that aggressively courts high-rollers with the promise of large jackpots but reserves the right to lower their winnings if those winnings get ‘too large.’” Further, the complaint surmises that would-be whistleblowers may weigh the costs and benefits of the revised whistleblower program and choose not to report possible securities violations to the SEC if they are worried their awards may be adjusted downwards or denied outright under the related action rules, ultimately reducing the number of individuals who report.

Certainly for the whistleblower bar, significant contingent legal fees are at stake.  The complaint notes that Thomas currently has nine whistleblower clients awaiting a final determination of entitlement to an award from the SEC, and that given the monetary sanctions collected, his clients collectively are eligible for awards of more than $300 million.  On each of these potential awards, Thomas’ firm will receive a contingency fee, and Plaintiff Thomas will receive incentive compensation for recovering the award on behalf of his client.

This is the first action attacking the Final Rule and no doubt will be met with a vigorous defense by the SEC.  We will monitor the progress of this action and questions of standing (i.e., whether lawyers that represent whistleblowers have standing to challenge this Final Rule) and whether the Final Rule passes muster under the APA.

Another Cost of COVID-19 Remote Work – States Want their Cut of Payroll Taxes

Many employers now have employees who have shifted from working in the employer’s office to working remotely from home as a result of the COVID-19 pandemic. The situation where an employer’s office is located in one state and the employee now works from home in a different state raises several state tax implications, including creating tax nexus between an employer and a state (which would subject the employer to the state’s income and sales tax regimes) and requiring an employer to withhold state income taxes from compensation paid to such employee. READ MORE

Control of the Senate or Not, Biden Has a Pen: Executive Orders Employers Can Expect Under the New Administration

With the Georgia Senate race and control of the Senate hanging in the balance, a Biden Administration’s ability to enact new employment-related legislation is questionable.  However, with the stroke of a pen, a Biden Administration can make significant changes through Executive Order.  In this post, we attempt to identify several areas where rule by Executive Order may come.

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Regulators Offer Insights Into SEC, CFTC, and OSHA Whistleblower Program’s Trends and Priorities

On July 13, 2020, three prominent whistleblower law regulators spoke at PLI’s Corporate Whistleblowing in the Coronavirus Era 2020, which was co-chaired by Orrick partners Mike Delikat and Renee Phillips. With the standard disclaimer that their comments and opinions were their own and not the official comments of their respective agencies, each spoke about their agencies’ whistleblower program’s current progress, challenges, and priorities. READ MORE

Good News for PPP Loan Recipients: Deferrals for Employer Portion of Social Security Tax Now Available

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” (Public Law 116-136)) allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax from March 27, 2020 (the date of its enactment) through December 31, 2020, that they otherwise would be responsible for paying to the federal government with respect to their employees. Employers generally are responsible for paying a 6.2-percent Social Security tax on employee wages. READ MORE

EEOC Updates its Guidance on Important COVID-19 Return to Work Issues

On June 11, the U.S. Equal Employment Opportunity Commission (“EEOC”) again updated its compendium FAQs on COVID-19 and the workplace. The latest revisions provide additional guidance on non-discrimination obligations under various federal non-discrimination laws as employees return to work. We previously blogged about the agency’s FAQ guidance here. READ MORE

SEC Awards Largest Bounty Ever and More Expected to Come Out of the COVID-19 Pandemic

As we reported last month, the Securities & Exchange Commission (SEC) has continued to award numerous multi-million-dollar bounties under its Dodd-Frank whistleblower program notwithstanding the current COVID-19 crisis. READ MORE

The CDC Provides Guidance: Antibody Testing Cannot Be Used as a Return to Work Passport

On May 26, 2020, the Center for Disease Control and Prevention (“CDC”) released its anxiously awaited Interim Guidelines for COVID-19 Antibody Testing (the “Guidelines”). As set forth in further detail below, the Guidelines make clear that COVID-19 antibody testing should not be used to make decisions about returning employees to the workplace.

While the Guidelines detail some encouraging data developed from early studies on antibody testing, several concerns remain. On the encouraging side, the CDC states in the Guidelines that “nearly all immune competent individuals” will develop an immune response following infection with COVID-19 and recurrence of COVID-19 illness “appears to be very uncommon,” suggesting that COVID-19 antibodies may confer at least some short-term immunity. Consistent with this observation, the Guidelines further note that in experiments involving primates, infection and subsequent development of antibodies resulted in protection from reinfection. Additionally, the Guidelines note that antibody development in humans correlates with a marked decrease in viral load in the respiratory tract. According to the CDC, taken together, these observations suggest that the presence of antibodies may decrease a person’s infectiousness and offer some level of protection from reinfection. However, the Guidelines make clear that definitive data are lacking and it remains uncertain whether individuals with antibodies are protected against reinfection with COVID-19, and if so, the duration of that protection and what concentration of antibodies is needed to confer protection.

In addition to these issues, the CDC raises several other concerns in the Guidelines regarding antibody testing. The Guidelines note that some antibody tests can lead to false positive results, when they react with the presence of antibodies to other coronaviruses like the common cold. Moreover, the CDC cautions that certain individuals may not develop detectable antibodies even after infection while others’ levels could wane over time to be undetectable. The timing of antibody tests can affect the result as well; as the CDC notes, the most useful antibodies for assessing antibody response are not present early in infection, and only become detectable 1-3 weeks after symptom onset. Thus, antibody test results may not definitively indicate the presence or absence of current or previous COVID-19 infection.

In light of the continuing uncertainty regarding these issues, the CDC affirmatively states that COVID-19 antibody testing results “should not be used to make decisions about returning persons to the workplace.” The CDC specifically notes that although certain testing can have “high positive predictive value” indicating at least some degree of immunity, “until the durability and duration of immunity is established, it cannot be assumed that individuals with truly positive antibody test results are protected from future infection.” In addition to stating that employers should not use antibody testing to determine eligibility to return to the workplace, the CDC also recommends against using antibody testing to make decisions about admitting individuals to other congregate settings, such as schools, dormitories, or correctional facilities.

Finally, the CDC states that its Guidelines do not affect existing guidance from public health authorities and other governmental agencies on maintaining social distancing and using PPE in the workplace. The CDC notes that healthcare workers and first responders should continue to use PPE even if they test positive for COVID-19 antibodies. Further, while those who test positive for antibodies and do not have a recent history of “a COVID-19 compatible illness” have a low likelihood of active infection, they should still follow general recommendations to prevent the spread of infection.

While this area is rapidly evolving, employers now have affirmative guidance from the CDC that antibody testing should not be used to make decisions about bringing employees back to work. Since the EEOC has largely deferred to the CDC on this issue, employers who condition an employee’s return to work on a positive test for antibodies may be subject to claims by both the individual and the EEOC.

EEOC Expands Guidance Regarding COVID-19

The U.S. Equal Employment Opportunity Commission (“EEOC”) recently updated their guidance relating to the COVID-19 pandemic on Thursday, addressing several additional FAQ in response to inquiries from the public. In the updated guidance, “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws,” the EEOC expands on its previous publication issued in March and based on guidance it issued in response to the H1N1 outbreak in March 2009. READ MORE

New York COVID-19 Developments: NYS DOL Encourages Workers to File a Complaint Online

The New York State Department of Labor (“NYS DOL”) has launched a new webpage dedicated to alerting workers regarding COVID-19 related employment protections and allowing  them to submit  a complaint online by simply clicking the “File a Complaint” link. The new webpage encourages workers to file a complaint with the NYS DOL if their employers violate any provisions of the state’s new law providing sick leave, paid family leave and disability benefits to employees impacted by mandatory or precautionary orders of quarantine or isolation due to COVID-19, including any violations of Governor Cuomo’s recent Executive Order mandating all non-essential workers to stay home. These violations include being forced to perform work at an employer’s worksite if the employer is a non-essential business or being threatened if an employee does not work at a place other than the employee’s home. It should be noted that the NYS DOL appears to be creating the right to file a complaint on a number of issues that are not explicitly addressed within the legislation or guidance regarding the legislation and it remains to be seen whether the NYS DOL has authority to pursue alleged violations of the legislation for the reasons described below. READ MORE