Title: Sarbanes-Oxley Act of 2002 (SOX of 2002)
Statute: Sarbanes-Oxley Act of 2002
Governing Agency: United States Department of Labor
General Overview: The Sarbanes-Oxley Act of 2002 was passed into legislation to create a comprehensive law for protecting whistleblowers in publicly-traded companies and public accounting firms who report misconduct relating to financial practice and corporate governance. This act was put into place to bolster confidence back into the stock market and economic sector after shattering scandals such as Enron and WorldCom. The Sarbanes-Oxley Act of 2002 provides protections to corporate employees and others who report violations which harm the value of public companies investments, including stocks and bonds. Compared to other whistleblower laws this act is very unique, mainly due to a broader array of protections and much stiffer penalties, including jail time. The Sarbanes-Oxley Act of 2002 uses 18 U.S.C § 1513(e) to outline the protections and remedies.
Who is covered?
· Any current or former employee of a publicly-traded company or public accounting firm, including their officers, employees, contractors, subcontractors, or agents.
· Any applicant for employment in a publicly-traded company or public accounting firm.
Note: Any party who falls under these categories that is working in another country is protected under SOX of 2002 when disclosing acts, as long as the acts began in the United States.
Who is not covered?:
· This act does not apply to private businesses.
· Only two provisions of SOX of 2002 apply to non-profit organizations: whistleblower protections and the prohibition of altering or concealing of documents.
What is covered?:
-The parties covered under the Sarbanes-Oxley Act of 2002 cannot be retaliated or discriminated against for:
· making a disclosure of alleged mail, wire, or securities fraud
· making a disclosure of alleged violations of SEC regulations or of laws relating to fraud against shareholders
· making any disclosure that creates serious legal liability, affects public confidence, or otherwise threatens stock values
· making a disclosure of alleged environmental lawlessness, safety issues, and corruption scandals
Note: These disclosures are protected if reported to federal law enforcement, regulatory personnel, congressional committee, or supervisors or others in the corporate chain of command.
-Illegal retaliation by employers includes:
· discharging claiming party
· suspension
· demotion
· threats, harassment, or any other behavior that might dissuade a reasonable party from exercising their legal rights
How do I submit a claim? Step-by-Step Approach:
1. If you believe you have been discriminated or retaliated against by your employer for partaking in an activity protected by the Sarbanes-Oxley Act of 2002 you have up to 180 days to file a complaint with the United States Department of Labor. File a complaint with the DOL.
2. The Department of Labor reviews the complaint and refers it to the Occupational Safety and Health Administration, which will begin an investigation.
3. At the conclusion of the investigation, the Occupational Safety and Health Administration will issue a ruling. If either party objects to this ruling they may request a hearing with an Administrative Law Judge (ALJ).
4. The ALJ will hear the case and issue a ruling. Either party may appeal this ruling within 30 days of the decision. Appeals are heard by the Department of Labor’s Administrative Review Board (ARB).
5. If the Department of Labor does not issue a decision on one’s case within 180 days, and the reason for this delay is not due to the claiming party, a suit may be filed in U.S. District Court. The claiming party must give 15 day notice to the opposing party, and the ALJ or the ARB before filing in Distinct Court.
Rights and Remedies:
· Equitable relief (injunctions)
· Reinstatement of employee with same seniority status
· Back pay (with interest)
· Compensation for any special damage sustained as a result of the discrimination or retaliation
· Reasonable attorney’s fees and other related litigation costs
· Interim relief
· Damages for emotional distress, pain and suffering, and loss of reputation
· Corporations can be fined 0,000 and individuals can be fined 0,000 along with up to ten years in prison for each violation (jail time is very unlikely)
Related Links:
· Impact of the Sarbanes-Oxley Act of 2002 on Private Businesses