Congress enacted the Public Company Reform and Investor Protection Act of 2002, commonly known as the Sarbanes-Oxley Act, in response to a string of high-profile corporate accounting scandals. Section 806 of the Sarbanes-Oxley Act protects whistleblowers who report conduct by their employer that constitutes fraudulent activity under regulations set forth by the Securities and Exchange Commission (SEC) or under any provision of federal law relating to fraud against shareholders.
Sarbanes-Oxley whistleblowers have obtained substantial recoveries, often jury verdicts adding up to millions of dollars in whistleblower protection cases. Publicly traded companies are subject to liability if they commit retaliatory acts against employees for reporting or assisting in an investigation of fraud or other securities violations. The law prohibits a range of retaliatory actions against an employee including but not limited to termination, demotion, suspension, threats, harassment or discrimination.
The Sarbanes-Oxley whistleblower protection attorneys at Kingsley and Kingsley Lawyers have successfully represented employees and senior professionals in whistleblower protection cases where the stakes are high. Our whistleblower lawyers in Los Angeles have the knowledge, experience and resources it takes to protect workers in Los Angeles who stand up for what is right.
Sarbanes-Oxley Whistleblower Protection Remedies
Whistleblowers may be able to receive the following damages under the Sarbanes-Oxley Act:
- Lost wages and benefits
- Reinstatement or front pay
- Special damages including emotional distress, damaged reputation, personal humiliation and other types of non-economic damages that could result from retaliation
It is important to note that there is no cap on special damages under the Sarbanes Oxley Act. Some state laws also enable whistleblowers to receive punitive damages.
What is Protected Under the Sarbanes-Oxley Act?
The Sarbanes-Oxley Act protects corporate whistleblowers for exposing information about various types of fraudulent activity including securities fraud, shareholder fraud, bank fraud, wire fraud, or a violation of any Securities and Exchange Commission (SEC) regulations.
Here are a few things to know about what is protected under this law:
- When an employee provides information about an imminent violation, that is protected, even though it has not occurred yet. This protection is afforded to employees who reasonably believe that a securities violation is imminent. Therefore, they will be protected when they report the violation before it has occurred.
- The law protects employees who may have mistakenly believed that their employer violated the law as long as their belief was "objectively reasonable." This means that the employee must show that a reasonable person who had the same facts, training and experience would come to a similar conclusion that the employer violated securities laws.
- In order to receive protection under the Sarbanes-Oxley Act, the employee's report need not definitively and specifically relate to one of the listed categories of fraud o securities violations.
Proving a Violation of Sarbanes-Oxley Whistleblower Protection Law
In order to prevail under the Sarbanes-Oxley whistleblower provision, employees must prove by a preponderance of the evidence that:
- They engaged in an activity that was protected
- The employer was aware that they engaged in said protected activity
- They were retaliated against or were subject to an unfavorable personnel action
- The protected activity in which they engaged caused or contributed to the retaliatory action
Under the law, a "contributing factor" is one that tends to affect the outcome of the decision. Once the employee proves these elements, the employer can avoid liability only showing clear and convincing evidence that they would have taken the same unfavorable personnel action even if the employee had not engaged in the protected activity.
Statute of Limitations
The deadline for a Sarbanes-Oxley whistleblower to file a complaint is 90 days after the whistleblower first experiences or becomes aware of the unlawful retaliation. The clock begins to tick once the discriminatory decision has been made and communicated to the complainant. The 90-day clock begins to tick on the date of each retaliatory act such as the date on which a whistleblower is informed about his or her termination, suspension, demotion, etc.
What Does Sarbanes-Oxley Do for Employees?
The Sarbanes-Oxley whistleblower provision protects employees who report activity they reasonably believe to be illegal, even if a court later determines that the reported behavior did not violate any laws. This protection encourages employees to report fraudulent or suspicious activity without fear of retaliation. It is important to remember that employees must file a complaint with the Department of Labor within 90 days of the retaliatory act. The time limit often cannot be extended. Once the complaint is received, the Department of Labor will inform the employer about the allegations, conduct an investigation, and issue written findings. Either one of the parties may choose to challenge the written findings and seek an administrative review.
Contact a Los Angeles Sarbanes-Oxley Act Lawyer
If you are an employee of a publicly traded company and know of activity that you believe is illegal or fraudulent, please contact the experienced Sarbanes-Oxley Act lawyers at Kingsley and Kingsley Lawyers to schedule a free consultation with one of our LA employment lawyers. We can help you better understand your legal rights and options. Contact us at (818) 990-8300 to find out how we can help you.