OSHA Releases New Sarbanes-Oxley Whistleblower Rules

On November 3, 2011, the Occupational Safety and Health Administration (OSHA) published interim final rules that modify regulations pertaining to whistleblower complaints filed under the Sarbanes-Oxley Act of 2002 (SOX). The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contained amendments that strengthen SOX whistleblower provisions.  The recently released interim rules aim to bring SOX whistleblower regulations in line with the Dodd-Frank amendments and OSHA regulations for other whistleblower programs.

Broader protections for whistleblowers under Dodd-Frank Amendments

Significantly, Dodd-Frank extended protection for employees against workplace retaliation by credit rating agencies and other “nationally recognized statistical rating organizations” as defined in the Securities Exchange Act of 1934. 15 U.S.C. § 78c.  The new OSHA rules adopt this definition and, similarly, modify the definition of “company” to mirror the definition under the Sarbanes-Oxley Act.

Extended complaint filing period and acceptance of oral complaints

Additionally, the regulations have been changed to reflect statutory changes to complaint filing procedures, extending the filing period for retaliation complaints under Sarbanes-Oxley from 90 to 180 days after either the violation occurs or after the date on which the employee became aware of the violation. Most notably, the new rules clarify that oral complaints to OSHA are permitted, whereas previously the rules indicated that only written complaints are allowed. This change is consistent with OSHA procedural requirements under other whistleblower statutes. If a complaint is made orally, OSHA will create a written record of the complaint.  Moreover, complaints may be filed in any language if the complainant is unable to file in English, and others may file on the behalf of the employee if the employee has given consent. Finally, the complainant may provide notice of withdrawal of a complaint orally or in writing.

OSHA notes that allowing oral complaints is consistent with Administrative Review Board (ARB) decisions that have long allowed oral complaints under certain environmental and asbestos statutes.  Also influencing OSHA’s decision is the Supreme Court’s ruling in Kasten v. Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325 (2011), which held that oral complaints of regulatory violations are protected under the anti-retaliation provision of the Fair Labor Standards Act.  SOX does not prescribe any particular form for complaints filed under the statute.

Dodd-Frank Amendments right to review in federal district court

Another change to Sarbanes-Oxley made by Dodd-Frank and reflected in the rule changes relates to the right to a jury trial in actions brought under the Sarbanes’ “kickout” provision. 18 U.S.C. § 1514A (b)(1)(B). This provision gives the complainant a right to bring a de novo action in federal district court, regardless of the amount in controversy, if the Secretary of Labor fails to issue a final decision within 180 days of a complaint being filed, provided that the delay is not the result of bad faith on the part of the complainant.

More thorough review of parties’ positions during investigation

The interim rules section pertaining to the investigation of complaints brings investigative procedures under SOX in line with procedures under other OSHA whistleblower statutes. The new rules require that during the investigatory process OSHA provide the complainant with a copy of the responding party’s submission so that the complainant has an opportunity to respond.  According to OSHA, this change will enhance its ability to conduct full and fair investigations and allow more thorough assessments of the respondents’ defenses.

Broader relief available for whistleblowers

The new rules omit the provision in SOX which deemed reinstatement inappropriate where the respondent demonstrates that the complainant is a security risk.   OSHA’s explains in the interim rules that the issue of whether reinstatement is appropriate should be made “on the basis of the facts of each case and the relevant case law;” therefore, it is unnecessary to define the precise situations in which reinstatement is inappropriate. The rules also state that OSHA may order “economic reinstatement,” which is similar to an order of “front pay” under the Federal Mine Safety and Health Act of 1977 and may be granted instead of the typical preliminary reinstatement when reinstatement may not be appropriate or inadvisable.  Economic reinstatement requires that the employer pay the employee wages without the employee having to return to work.  Employers are not entitled to choose economic reinstatement, nor do they have any basis for recovering the costs of economic reinstatement in the event that the employer eventually prevails in the adjudication.

Non-substantive changes in terminology

OSHA has made certain non-substantive changes to terminology to ensure consistency with procedural rules under other statutes. Specifically, cases under the whistleblower provision of Sarbanes-Oxley are now referred to as actions alleging “retaliation” and no longer “discrimination,” individuals previously referred to in such complaints as “named persons” are now called “respondents,” and “unfavorable personnel actions” are now called “adverse actions”.

The interim final rules are currently available here.  Interested parties are invited to comment by January 3, 2012. Comments may be submitted electronically at http://www.regulations.gov or by fax or mail with further instructions found here.