On August 31, 2012, the Administrative Review Board (ARB) of the U.S. Department of Labor (DOL) liberally interpreted the standard governing when the SOX statute of limitations clock starts ticking, ruling that a letter informing Complainant Kenneth Poli that he was being placed on a “convenience leave” was not a “final, definitive and unequivocal” notice of termination, and therefore did not start the clock. Poli v. Jacobs Engineering Group, Inc., ARB No. 11-051 (Aug. 31, 2012).

Background

Complainant was a project engineer for Respondent Jacobs Engineering Group, Inc. (the Company).  On October 26, 2009, after reporting concerns about a subcontractor’s billing practices, Complainant received a letter informing him that he was being placed on a “convenience” leave of absence, effective November 2, 2009, with an anticipated return-to-work date of January 2, 2010. The letter stated, in pertinent part:

When your Company Convenience Leave ends, every reasonable effort will be made to return you to the same position, if it is available, or to an equivalent position for which you are qualified.  However, the Company cannot guarantee reinstatement in all cases. If after your leave expires you do not return to work, the Company will assume you have resigned from your position.

Then, in a letter dated January 5, 2010, the Company informed Complainant that there were no positions available and therefore his employment had been terminated effective January 4, 2010. On March 24, 2010, Complainant filed a complaint with OSHA claiming that the Company violated SOX by, among other things, placing him on an extended leave of absence.

The ARB’s Ruling

An ALJ dismissed the complaint as untimely because it was not filed within 90 days of his receipt of the letter placing him on “convenience leave” (this was the statute of limitations period that existed before Dodd-Frank was enacted, and was applicable at the time Complainant initiated this action; Dodd-Frank doubled it).

The ARB reversed, however, noting that SOX’s statute of limitations runs from when an employee receives a “final, definitive and unequivocal notice of an adverse employment decision,” and concluding that the letter informing Complainant of his convenience leave was not “final, definitive and unequivocal” notice of his termination. In so concluding, the ARB noted that the letter:  (i) stated that the company would make “every reasonable effort” to return Complainant to his position; (ii) indicated an anticipated return-to-work date; (iii) was “based on the lack of billable work, and was not due to disciplinary action”; and (iv) permitted Complainant to receive benefits during his leave period. Even though the Company informed Complainant that it could not guarantee his reinstatement, the ARB found this was not enough to evince the requisite finality to cause the SOX statute of limitations clock to start ticking.

Implications

This decision arguably reflects a step backwards for employers faced with stale SOX whistleblower litigations before the DOL given the narrow construction the ARB gave to the “final, definitive and unequivocal notice” requirement for SOX’s limitations period to begin running. Federal courts faced with the questions at issue in this case may take a different approach, particularly given that the complainant knew or should have known that he may never have returned to active work after receiving the November 2, 2009 letter, which expressly indicated that he had no guarantee of continued employment. Moreover, this decision is arguably at odds with the U.S. Supreme Court’s seminal decision in Ricks v. Delaware State College, 449 U.S. 250 (1980), where the Court held that the statute of limitations for Title VII and §1981 claims runs from when the plaintiff first learned of an adverse action (in that case, when the plaintiff – a college professor – learned he had been denied tenure and, as a result, would be offered a one-year “terminal” contract).

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Photo of Lloyd B. Chinn Lloyd B. Chinn

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative…

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd’s practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media, education and technology, he focuses a substantial portion of his practice on the financial services sector. He has tried to final verdict or arbitration award substantial disputes in this area.

Due to Lloyd’s litigation experience, clients regularly turn to him for advice regarding the full range of employment matters, including terminations, whistleblower policy and procedure, reductions in force, employment agreements, and employment policies. For example, in the wake of the financial crisis, he has counseled a number of firms through reductions in force and related bonus and deferred compensation disputes. Lloyd has also been retained to conduct internal investigations of allegations of workplace misconduct, including claims leveled against senior executives.

Lloyd has represented global businesses in matters involving Sarbanes-Oxley and Dodd-Frank whistleblower claims. He has taken an active role in the American Bar Association on these issues, currently serving as Co-Chair of the Whistleblower subcommittee of the ABA Employee Rights and Responsibilities Committee. Lloyd has spoken on whistleblowing topics before a numerous organizations, including the American Bar Association, ALI-ABA, Association of the Bar of the City of New York, and New York University School of Law. He has testified twice before Congressional subcommittees regarding whistleblower legislation and has also published blog postings, articles and client alerts on a variety of topics in this area, including the Dodd-Frank Act’s whistleblower provisions. Lloyd is a co-editor of Proskauer’s Whistleblower Defense Blog, and he has been widely quoted by on whistleblower topics by a number of publications, including the New York Times, the Wall Street Journal, the National Law Journal and Law 360.

Lloyd has also become active in the International Bar Association, presenting on a variety of subjects, including: the #MeToo movement, the COVID-19 pandemic and employment law, and cross-border harmonization of employment provisions in transactions. Lloyd also hosts a quarterly roundtable discussion among financial services industry in-house employment lawyers. He has also published articles and given speeches on a variety of other employment-law topics, including non-solicitation provisions, FINRA arbitration rules, cross-border discovery, e-discovery, and the use of experts.

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.