osha2On March 5, 2015, OSHA issued a long-awaited Final Rule regarding SOX whistleblower procedures and related matters. The new Final Rule will replace the Interim Final Rule enacted in 2011, after Dodd-Frank amended SOX. The Final Rule largely follows the Interim Final Rule, even though commenters expressed a range of serious concerns. One key revision that was implemented in the Final Rule based on response from commenters was a procedure requiring each party’s filings to be shared with the other party.

As an initial matter, Dodd-Frank amended several key provisions of Section 806 of SOX and expanded protections for employee-whistleblowers. For example, it changed the SOX statute of limitations for filing a complaint from 90 to 180 days. And it expanded the SOX definition of “covered employers” to include subsidiaries and affiliates of publicly traded entities and national credit-rating agencies. OSHA’s Interim Final Rule enacted in November 2011 implemented those modifications temporarily while the DOL solicited comments from stakeholders.

Following implementation of the Final Rule, a covered employee who believes his employer took adverse action against him based on his protected activity (including reporting what he “reasonably believed” to be mail, bank, wire or securities fraud), may file a complaint with OSHA within 180 days of the action. The complaint may be oral or written, and the employee must show only that his or her protected activity was a contributing factor to the adverse action. The employer must then show by clear and convincing evidence that it would have taken the adverse action regardless of the protected activity; if it fails to do so, then OSHA’s investigation will continue.

In addition, if, after its investigation concludes, OSHA determines that there is reasonable cause to believe a violation of Section 806 of SOX has occurred, then OSHA will issue a preliminary order including any appropriate relief to make the employee whole, including reinstatement. The employer may file an objection within 30 days of OSHA’s preliminary order and may request a hearing with an ALJ. However, any relief included in the preliminary order – including reinstatement – will take effect immediately. Even if the employer is eventually found to have not retaliated against the employee, the employer may not recover wages paid during the reinstatement period under the Final Rule – despite commenters concern about this issue.

Implications

Employers covered by Section 806 of SOX need to be vigilant in responding to whistleblower complaints in light of OSHA’s strict requirements. Moreover, they should recognize that the risks have heightened further, as OSHA is accepting oral SOX whistleblower complaints and, in rejecting a range of comments to the Interim Final Rule, has taken a firm stance on issues related to reinstatement of whistleblowers.

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Photo of Steven J. Pearlman Steven J. Pearlman

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

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

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

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. 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.

Thought Leadership and Accolades. Steven was named 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 has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

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 U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often 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.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

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