Posts by: Mike Delikat

Whistle While You Work: SEC Whistleblower Office Releases Its 2016 Annual Report

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The SEC released its Fiscal Year 2016 Annual Report (the “Report”) to Congress on the Dodd-Frank Whistleblower Program on November 15, 2016. The Report analyzes the tips received over the last twelve months by the SEC’s Office of the Whistleblower (“OWB”), provides additional information about the whistleblower awards to date, discusses the OWB’s efforts to combat agreements that chill whistleblowers, and describes the OWB’s recent activity in the anti-retaliation arena.

Breakdown of Tips Received in FY 2016

The OWB reported a modest increase in the number of whistleblower tips and complaints that it received in 2016–4,218 tips in 2016 compared to 3,923 tips in 2015. Overall, the 2016 whistleblower tips were similar in number and type of whistleblower tips reported in 2015. As in 2015, the most common types of allegations in 2016 were Corporate Disclosure and Financials (22%), Offering Fraud (15%), and Manipulation (11%). Most whistleblowers, however, selected “Other” when asked to describe their allegations.

The OWB received whistleblower tips and complaints from all 50 states, the District of Columbia, and Puerto Rico. Domestically, the largest number of whistleblower complaints and tips were from California (547), New York (296), Florida (239), and Ohio (230). Additionally, the OWB received whistleblower tips from individuals located in 67 foreign countries. Of these, the countries from which the largest number of tips originated were Canada (68), the United Kingdom (63), Australia (53), the People’s Republic of China (35), Mexico (29), and India (20), with Germany, Ireland, and Taiwan being other countries from which the SEC received more than 10 tips.

More Questions for Employers As DOL Appeals Preliminary Injunction of Overtime Rules

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On December 1, 2016, the date that the Department of Labor regulations were set to become effective, the government filed a notice of appeal [link to http://dciconsult.com/wp-content/uploads/2016/12/DOL-appeal.pdf] of the November 22, 2016 the United States District Court for the Eastern District of Texas’s Order granting a nationwide preliminary injunction “from implementing and enforcing” the DOL’s new overtime regulations. Those regulations would have raised the minimum salary level for exempt employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The Court’s ruling was based, in part, on its holding that the DOL exceeded its delegated authority by changing the salary basis test at a level that was contrary to Congress’ intent that executive, administrative and professional employees be exempted from coverage of the FLSA. A full copy of the injunction order can be found here. In the wake of the Court’s ruling and now uncertain future regarding the DOL’s new overtime rules, we thought it would be helpful to provide some interim guidance on frequently asked questions we have received since the Court’s ruling.  READ MORE →

Blacklist Regs Get a “Preliminary” Black Eye from the District Court in Texas

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On October 24, 2016, U.S. District Court Judge Marcia Crone of the Eastern District of Texas granted a nationwide preliminary injunction enjoining implementation of the Fair Pay and Safe Workplaces regulations.  In addition to enjoining implementation of the reporting obligations, the court also enjoined enforcement of the pre-dispute arbitration ban on Title VII claims.

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SEC Bounty Hunters Take Heart: SEC Fines Company $265,000 For Using Severance Agreements That Provided a Waiver of Any Monetary Recovery For Filing a Tip

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shutterstock_150166427_200x150Today, the SEC announced that an Atlanta-based company, BlueLinx Holdings, is settling charges that its severance agreements contained provisions that it in its view might impede employees from communicating directly with the SEC about possible securities law violations. The company has agreed to pay a $265,000 sanction and to engage in other corrective actions as described below.

The specific provision at issue provided:

  • Employee further acknowledges and agrees that nothing in this Agreement prevents Employee from filing a charge with…the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other administrative agency if applicable law requires that Employee be permitted to do so; however, Employee understands and agrees that Employee is waiving the right to any monetary recovery in connection with any such complaint or charge that Employee may file with an administrative agency. (Emphasis added.)

With respect to this bounty waiver, the Commission stated that “by requiring its departing employees to forgo any monetary recovery in connection with providing information to the Commission, BlueLinx removed the critically important financial incentives that are intended to encourage persons to communicate directly with the Commission staff about possible securities law violations.”

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Germany’s Financial Regulator Establishes New Whistleblower Platform

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Last week, Germany’s Financial Supervisory Authority (BaFin) unveiled a centralized platform for receiving whistleblower complaints, including anonymous complaints, of alleged violations of supervisory provisions within the financial sector.  The move appears to represent a shift in German ideology toward a more favorable view of anonymous reporting, which for many years was discouraged in Germany and more broadly in the EU due to the risk of “organized systems of denouncement.”  Under the new program, whistleblowers may submit reports in writing (on paper or electronically), by phone (with or without recording the conversation), or verbally.  BaFin’s press release announcing the program states that it will make the anonymity of whistleblowers a “top priority,” and that it will not pass on the identity of whistleblowers to third parties.  The program is “aimed at person with a special knowledge of a company’s internal affairs – for example because they are employed there or have some other contractual relationship or relationship of trust with the company.”

BaFin was required to implement this new platform due to an amendment to the German Act on Financial Services Supervision.  Notably, the Act only applies to the financial services sector, not including external accountants, tax consultants and attorneys. It provides that employees working in the financial services sector may not be held liable for reporting potential or actual breaches of law under either employment law or criminal law, unless the report was false or grossly negligent.

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Brexit: What Does it Mean for Employers in the U.K.?

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We set out below our best guess on where this leaves employees, management and HR in the UK.

Firstly as we have all heard repeatedly today, nothing is going to change immediately and that is the same for employment law.  It will be years before any changes are made and for the time being, everything remains the same and critically, no one has to leave.

Much of our employment law is just that – employment law driven solely by the UK.  We then have laws that have been enacted into UK law as a result of European directives – so those laws are the ones that may, at some point in the future, be targeted.  Our guess at Orrick is that changes where they happen will be focused on consultation rights, holiday pay and working time.  Worker involvement has never had the same traction in the UK that it has with our European counterparts and the UK has always viewed employee consultation with a degree of skepticism.  For this reason, we think it may eventually be a focus for change.

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Digging Into the New Overtime Regulations

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In 2015, the Department of Labor (“DOL”) proposed substantial changes to the minimum salary level requirements, sought input on whether bonuses and incentives should be included in meeting the salary level test and considered changing the duties test to establish overtime eligibility. Taken together, these proposed changes would have had a drastic effect on the obligation of employers to pay overtime. On May 18, 2016, DOL issued its Final Rules and employers have until December 1, 2016 to comply. Overall, the changes strike a middle ground as DOL declined to adopt the more restrictive California 50% duties test. However, doubling the salary level threshold and other changes present significant economic and compliance challenges for employers. Below is a summary of key takeaways and steps employers should consider to address these changes and ensure compliance.

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There’s No Longer an “App for That” in Austin: Lyft and Uber Pull Out Over Driver Fingerprinting Requirements

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Rideshare companies Lyft and Uber announced on May 9 that they were no longer offering their services in Austin, Texas, after voters there rejected a proposed ordinance that would have eliminated fingerprint-based background checks for drivers.  In a Saturday election, 56 percent of Austin voters, despite what some have called confusing ballot language, rejected the proposed ordinance, known as “Proposition 1,” which was supported by the companies.

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“Mind the (Gender Pay Equity) Gap”: The EEOC Holds Hearings on its Proposal to Require Pay Data on the EEO-1 Form

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On March 16, the Equal Employment Opportunity Commission heard testimony from a variety of advocacy groups, academics and employer representatives on with regard to its proposed revisions to the EEO-1 adding W-2 pay data. Gary Siniscalco from Orrick provided testimony as an employer representative. Click here for Gary’s testimony.

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