United States: DOL Issues Its Final Rule For SOX Whistleblower Complaints

Last Updated: March 10 2015
Article by Linda M. Jackson and John R. Annand

On March 5, 2015, the U.S. Department of Labor issued a Final Rule implementing protections for employees of securities companies and their subsidiaries, as well as employees of national credit-rating agencies.  The Final Rule protects employees of public companies, their subsidiaries, contractors and subcontractors from retaliation for reporting actions they believe to be violations of securities laws. The Final Rule replaces the Interim Final Rule the DOL implemented on November 3, 2011, at the direction of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), which amended the Sarbanes-Oxley Act of 2002 (SOX). The Final Rule is effective immediately.  

Does the Final Rule Differ From the Interim Final Rule?

SOX contained the original whistleblower provisions protecting employees who report fraudulent activity and violations of securities laws.  Dodd-Frank amended and clarified several SOX whistleblower provisions. The law expanded the SOX statute of limitations for filing a complaint from 90 days to 180 days.  It also expanded the definition of covered employers to include not just securities companies, but their subsidiaries and affiliates, as well as national credit-rating agencies.  The November 3, 2011 Interim Final Rule implemented these modifications on a temporary basis and solicited comments from stakeholders.  After receiving and considering the five comments that were submitted, the DOL issued Thursday's Final Rule.

The Final Rule does not deviate in any appreciable way from the Interim Final Rule, despite the fact that commenters expressed opinions on several important issues raised by the Interim Final Rule.  For example, comments were submitted expressing, among other reservations, concern with the allowance of oral complaints; with confidentiality of submissions and information sharing between the parties; with the lack of standards regarding the issuance of preliminary reinstatement orders; and with the absence of a mechanism for employers to recover wages paid pursuant to a preliminary reinstatement order, if the employer were later found to have not violated SOX.  However, the Final Rule reflected only a handful of commenters' suggestions.  Primary among the substantive comments that were incorporated was the addition of a procedure whereby each party's filings will be shared with the other, which the Interim Final Rule lacked.

What Employers Should Know About the Final Rule

Under the Final Rule, the complaint process is as follows: if a covered employee believes his or her employer took adverse action against him or her because he or she engaged in a protected activity (such as reporting what he or she "reasonably believed" to be mail fraud, bank fraud, wire fraud or securities fraud), he or she has 180 days from the date of the alleged retaliation to file a complaint with the Occupational Safety and Health Administration (OSHA).  The complaint may be either oral or written, and the employee must show only that his or her protected activity was a contributing factor to the adverse action.  Although commenters expressed concerns about the filing of oral complaints – particularly that oral complaints recorded by OSHA investigators could transform the investigators into advocates for the complainant – the agency dismissed these concerns.  In OSHA's view, a complaint of any type simply initiates the investigation, at which point the employer is given an opportunity to respond.

If the employer is then unable to show by clear and convincing evidence that it would have taken the adverse action regardless of the protected activity, then OSHA's investigation will continue.  These standards set a low bar for complaining employees and a high bar for employers, increasing the likelihood of an investigation.

If at the end of its investigation OSHA concludes there is reasonable cause to believe a violation of the SOX whistleblower provisions occurred, it will issue a preliminary order that includes the relief it deems necessary to make the employee whole, up to and including reinstatement.  Although the employer may file an objection within 30 days and request a hearing with an Administrative Law Judge (ALJ), any preliminary reinstatement the agency orders must take effect immediately.  Put another way, if OSHA's preliminary order requires reinstatement of the complaining employee, the employer must immediately reinstate the employee even if it files an objection and requests a hearing with an ALJ.  Employers will not be able to avoid preliminary reinstatement by establishing that the complaining employee is a security risk. This provision was removed from the Interim Final Rule and is likewise absent from the Final Rule.  Despite comments requesting that OSHA include standards in the rule regarding the circumstances under which preliminary reinstatement would be inappropriate, the agency refused. It declared that Congress intended for preliminary reinstatement to be the presumptive remedy in the event OSHA found reasonable cause to believe an employee was discharged in violation of SOX.

Notably, where the employer is eventually found to have not engaged in prohibited retaliation, the Final Rule does not permit the employer to recover wages paid during the reinstatement period, even if the reinstatement was economic rather than actual.  Although commenters pointed out that employers' due process rights might be violated in the event that they are unable to even argue for recovery of wages paid for wrongful reinstatements, OSHA disagreed.  The Final Rule contains no mechanism by which employers can recover in such situations. 

Recommendations for Employers

In the event an employer knows, or suspects, that an employee has engaged in an activity protected by SOX, the employer must take great care to ensure that the employee does not suffer adverse action that he or she would not have otherwise suffered.  Such adverse actions can include obvious actions such as termination, suspension, and demotion, but can also include any type of discipline or change in the terms of employment.  When in doubt, proceed cautiously, and consult with an attorney.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions