Congress passed the Sarbanes-Oxley Act of 2002 (“SOX”) in wake of several financial scandals at large American companies. Because whistleblowers at these companies disclosed much of the information that ultimately exposed the companies’ financial wrongdoing, Congress implemented stronger protections for whistleblowers at publically traded companies.
The Sarbanes-Oxley Act protects employees who provide information or assist in an investigation regarding conduct which they reasonably believe constitutes mail fraud, wire fraud, bank fraud, securities fraud, a violation of any rule or regulation of the Securities and Exchange Commission (“SEC”), or any federal law relating to fraud against shareholders. SOX protects employees who make such disclosures to a supervisor, an internal investigator, a federal regulatory or law enforcement agency, or Congress.
However, to claim whistleblower protection under SOX, a potential whistleblower should be prepared to act quickly in the event the company retaliates. Whistleblowers under SOX have only 180 days to notify OSHA within the Department of Labor that their employer has taken adverse action against them because of their protected whistleblowing.
The Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) also grants protections to certain whistleblowers, including those who make disclosures protected under SOX.
Dodd-Frank has a longer statute of limitations and more generous remedies. However, there is currently a debate among the courts regarding whether Dodd-Frank covers an employee who only discloses internally, such as to a supervisor, and not externally to the SEC. Until the courts resolve the debate over Dodd-Frank’s coverage, potential whistleblowers should be aware that that they should contact a lawyer quickly after any retaliatory conduct by the company to preserve their rights.