dolAn ALJ at the U.S. Department of Labor (DOL) recently ruled that a former CFO was entitled to approximately $1.9 million in back pay, front pay, and compensatory damages, concluding that he was retaliated against in violation of Section 806 of SOX.  Becker v. Community Health Systems Inc., 2014-SOX-00044 (ALJ Nov. 9, 2016).

Background.  Complainant held the position of CFO at Rockwood Clinic, an affiliate of Community Health Systems.  Complainant alleged that he was constructively discharged after he declined to lower projected losses.   He alleged that he was directed to adjust his projected EBITDA of negative $12.8 million to negative $4 million without explanation.  He claimed that after he allegedly ignored continued pressure to sign off on the lower figure, the company placed him on a performance improvement plan, threatened his job, maintained strict oversight over his work, and hired a special project CFO to handle several of his major assignments.  Nearly four months after his initial refusal, Complainant resigned and brought a SOX whistleblower claim before the DOL.

ALJ’s Ruling.  The ALJ ruled in Complainant’s favor and awarded him $1.9 million in back pay, front pay, and compensatory damages.  The ALJ determined that although Complainant was never privy to the company’s calculations behind the $4 million number, his purportedly extensive experience supported the reasonableness of his belief that submitting that lower figure would be fraudulent.  The ALJ also asserted that “no magic word” exists to put an employer on notice of protected activity and trigger whistleblower protections, so long as the employee identifies the conduct of concern.  Thus, according to the ALJ, Complainant’s purported concerns regarding his inability to justify the company’s proffered EBITDA number, even without any concrete mention of fraud or criminality, satisfied the notice element of his SOX whistleblower.  The ALJ concluded that Complainant’s purportedly “forced resignation” in the midst of pressure to engage in purportedly improper activity fell within SOX’s broad prohibition on retaliatory adverse actions.

Implications.  The size of this award underscores the risks attendant to SOX litigation in any forum, including before ALJs at the DOL.

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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.