OSHA has become not just the enforcer of health and safety regulations but the guardian angel of whistleblowers. It enforces 14 different federal laws that ban companies from retaliating against whistleblowers. Last week, we discussed the anti-retaliation provisions of the OSHA law itself. Now we turn to the number one source of whistleblower complaints: The Sarbanes Oxley Act of 2002 (SOX) and its Canadian equivalent, C-13.

The Crusade against Retaliation

OSHA has demonstrated that it plans to go all out to enforce SOX. For example, OSHA came down hard on a New Jersey company after a controller claimed he had been fired in retaliation for questioning the company’s accounting practices to his supervisors. OSHA concluded that the firing violated SOX and ordered the company to reinstate the controller, pay him $105,000 in back wages and remove all disciplinary letters from his file.

Likewise, the level of whistleblower protection regulation and enforcement is on the rise in Canada. In 2004, Canada’s version of a federal anti-retaliation law took effect. Bill C-13 (Sec.  425.1 of the Canadian Criminal Code) makes it a crime to retaliate against workers for reporting safety violations or engaging in other forms of whistleblowing. Similar anti-retaliation provisions are a staple of provincial OHS, environmental, labour, employment standards and human rights laws, to name just a few.

What Are SOX & C-13?

SOX and C-13 were both enacted to crack down on corporate and financial fraud. Protecting workers who blow the whistle on their companies is part of that strategy. Accordingly, Section 806 of SOX bans companies from firing or taking other “adverse action” against workers in retaliation for exposing corporate fraud or working with the authorities on a fraud case.

Workers who feel they’ve been the victim of retaliation can complain to OSHA. Section 608 gives OSHA authority to investigate the complaint and, as shown in the New Jersey case above, order the company to reinstate the worker with back pay and interest. OSHA can also order the company to pay special damages covering the worker’s attorney’s fees and legal costs.

Canadian law provides for similar penalties but goes SOX one better. C-13 is a criminal law and carries a maximum penalty of five years in jail.

The 4 Elements of a Retaliation Violation

SOX applies only to companies that are publicly traded. There are four things the government must show to prove a whistleblower violation under SOX. You can defend yourself by disproving any of these elements. These elements are parallel to what Crown prosecutors in Canada must prove to secure a conviction for retaliation under C-13.

1. Worker Engaged in Protected Activity

SOX protects workers who engage in whistleblowing or “protected activity.” This includes:

• Testifying or giving information against the company in fraud proceedings before a court, the Securities Exchange Commission (SEC) or other federal agency;
• Participating in an “investigation,” that is, giving information or reporting violations directly to a federal regulatory or law enforcement agency such as the SEC, FBI or U.S. Attorney’s Office, or a member of Congress or Congressional committee; and
• Reporting a violation or questionable practice internally to a supervisor or other company official with authority to investigate or terminate misconduct.

2. Company Knew of Worker’s Activity

A company can be liable for retaliation under SOX only if it knew that the worker engaged in one or more of the protected activities listed above. A company is considered to have knowledge if an officer, employee, contractor, subcontractor or other agent knew of the activity.

3. Company Took Adverse Action against Worker

SOX bans companies from taking adverse action against the worker. This includes:

• Firing;
• Demotion;
• Suspension;
• Threatening adverse action;
• Harassment; and
• Discriminating against the worker in any other way regarding compensation, terms, conditions or privileges of employment.

4. Adverse Action Was Retaliatory

Last, but not least, the government must show that the adverse action was in retaliation for the worker’s engaging in the protected activity. Retaliation doesn’t have to be the company’s only motive for taking adverse action; it need only be a “contributing factor” in the decision. Conversely, a company won’t be liable if it can show by “clear and convincing evidence” that it would have taken the same adverse action against the worker even if he hadn’t engaged in the protected activity.

Conclusion

Deliberately retaliating against a worker for complaining about safety is one thing. But what do you do if a worker complains about safety and engages in conduct that merits discipline? How do you punish the worker for the latter without looking like you’re retaliating against him for the former? I’ll show you how to deal with this situation next week.

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