DOLThe ARB recently concluded that a former program manager was entitled to recover more than $250,000 in back pay and benefits under Section 806 of SOX based on his discipline and constructive discharge.  The ARB clarified that a complainant may have engaged in protected activity by complaining of a failure to comply with state wage payment laws where his or her complaint in that regard is based on a reasonable belief that the employer is committing fraud by making a knowing misrepresentation or misstatement of material facts.  Dietz v. Cypress Semiconductor Corp., ARB No. 15-017, 3/30/16 (released 4/6/16).

Complainant complained that his employer violated federal mail and wire fraud laws by implementing a mandatory bonus plan resulting in wage deductions, in violation of certain state laws.  Complainant alleged that shortly after he lodged that complaint, the company disciplined him, removed some of his resources, accused him of errors, and demanded that he write memos about his alleged errors.  Two months later, Complainant wrote a letter to the company stating that he intended to resign.  Instead of beginning the company’s turnaround process (which the company designed to retain employees who expressed a desire to resign), Complainant was scheduled to attend a meeting two days later.  Complainant allegedly believed he would be fired at the meeting, so he declined to attend the meeting and resigned effective immediately.  Complainant proceeded to file a whistleblower retaliation claim under SOX.

The ALJ found that the Company retaliated against Complainant, and the Company appealed to the ARB.  The ARB found that the ALJ had correctly concluded that the Company retaliated against Complainant for his protected whistleblowing activities in violation of SOX.  It clarified that a complaint that a company has violated state law, standing alone, is not sufficient to trigger SOX, but in this case, Complainant also had a reasonable belief that the wage law violations reflected misrepresentations, which constituted protected activity.  Specifically, Complainant asserted that the company did not inform employees that they were subject to certain deductions, purportedly resulting in material misrepresentations regarding salaries that had been offered to employees.  The ARB ultimately affirmed the ALJ’s holding and award of more than $250,000 in back pay and benefits to Complainant.

This decision is concerning to employers, as it arguably broadens the protected activity covered by SOX to include state law violations which the complainant reasonably believes also constitute actionable fraud.

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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 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.