Risk & Compliance

Whistle-Blower Claims Mostly Dismissed

Eighty percent of the claims of employees seeking protection under the Sarbanes-Oxley Act have been tossed aside.
Stephen TaubJune 10, 2004

One of the most frequently used provisions of the Sarbanes-Oxley Act empowers corporate whistle-blowers, explicitly laying out procedures that protect them from being punished by the companies they blow the whistle on. Under the act, such employees are entitled to get their jobs back and be reimbursed for back pay and litigation costs.

Thus far, affected employers are likely to be happy with the bulk of the results, as most cases have been thrown out, according to Corporate Counsel magazine.

As of mid-April, 228 claims have been filed under Sarbanes-Oxley, according to the Department of Labor’s Occupational Safety and Health Administration (OSHA), which Sarbox put in charge of handling these claims. (Since 1972, OSHA has administered all federal whistle-blower cases.) That makes the new law the “first or second” most popular among federal whistle-blower statutes, John Vittone, chief administrative law judge at the Labor Department, told the publication.

Despite the frequency of their claims, however, employees are finding it especially hard to prevail. Through April, OSHA investigators have dismissed more than 80 percent of the 156 claims examined, added the article. On appeal, they do even worse: Plaintiffs won just 2 of 43 such cases.

Still, the high dismissal rate isn’t unusual in a new statute, since plaintiffs and their lawyers tend to test its limits, according to Stewart Manela, an attorney with Arent Fox PLLC cited in the article. And the fact that most of these cases have been dismissed for legal rather than factual grounds should be less satisfying to employers than the overwhelming number of dismissals, the magazine suggested.

Among the legal reasons for dismissal, some rulings held that that the statute does not apply retroactively. In other cases, the plaintiffs missed the 90-day deadline that starts the moment the alleged retaliation occurs.

When it came to rulings based on a case’s underlying merits, employees did much better, albeit in a tiny universe of four cases: Employers and employees each won twice. In all four cases, the loser appealed.

4 Powerful Communication Strategies for Your Next Board Meeting