Katz, Marshall & Banks, LLP partner David J. Marshall responded yesterday to criticisms from corporate lawyers of the Occupational Safety and Health Administration’s interim final rules for the Sarbanes-Oxley Act (“SOX”). As Law360 reported, the proposed rules expand employee protections under the Sarbanes-Oxley Act. The months-long comment period for the proposed rules, prompted by changes mandated to SOX’s whistleblower provisions by the Dodd-Frank Wall Street Reform and Consumer Protection Act, ended on January 3.
The proposed rules include an economic reinstatement provision, which would enable OSHA to order an employer to continue an employee’s pay for the duration of their whistleblower proceeding against the company, without requiring that the employee actually return to work. If the employer later prevails in the proceeding, it will not be able to recover those payments. While corporate lawyers railed against this provision as a violation of due process, Marshall explained that the rule was no different than forcing employers to cover the cost of defending whistleblower claims, or the cost of actual reinstatement. Besides, said Marshall, “The whole purpose of the SOX whistleblower provision is to do as much as possible to make sure that employees can report wrongdoing without fearing that they’re going to suffer by the loss of their jobs.”
Another of the proposed rules lowered the formal requirements for whistleblower complaints submitted to OSHA, including allowing complaints to be submitted orally. As Law360 reported, OSHA determined that “allowing for oral complaints was in line with decisions from the Labor Department’s Administrative Review Board, consistent with OSHA’s practice of accepting oral complaints under other laws and in accord with the U.S. Supreme Court’s March decision in Kasten v. Saint-Gobain Performance Plastics Corp., which held that the Fair Labor Standards Act’s anti-retaliation provision extended to oral complaints.”
While some attorneys for employers complained that OSHA had misapplied the Court’s holding in Saint-Gobain, and expressed concern at the lack of a written record of the employee’s complaint, Marshall argued that the complaint provision would be appropriately described as a clarification. SOX, Marshall said, doesn’t actually contain a written complaint requirement, and placing additional hurdles in front of employees was both contrary to the original intent of SOX and Dodd-Frank, and damaging to the public at large. “It is important to remember that whatever flexibility OSHA procedures afford to complainants in the administrative process benefits not only the complainants but also the public at large, who have a strong interest in the timely reporting of fraud,” said Marshall.