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On November 3, 2011, the Occupational Safety and Health Administration (OSHA) issued an interim final rule amending its regulations concerning employee protection from retaliation, or “whistleblower” claims, under Section 806 of the Sarbanes-Oxley Act. This interim rule implements changes to Sarbanes-Oxley made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The changes implemented by this rulemaking include adding employee protections against retaliation by nationally recognized statistical rating organizations, as defined by the Securities Exchange Act, or their officers and employees. They also include extending the filing period for retaliation complaints from 90 to 180 days after the date on which the violation occurs, or the employee becomes aware of the violation. And the interim final rule grants parties a right to a jury trial in district court actions brought under Sarbanes-Oxley’s “kickout” provision, which provides for de novo review in the appropriate district court, regardless to the amount in controversy, if the Secretary of Labor has not issued a final decision within 180 days of the filing of a complaint.
In addition to addressing these changes under Dodd-Frank, the new rule amends OSHA’s procedural requirements under Sarbanes-Oxley to make them more consistent with OSHA’s procedural rules under other whistleblower statutes, such as the Surface Transportation Assistance Act, the National Transit Systems Security Act, and the Federal Railroad Safety Act. Pursuant to these revisions, whistleblower complaints no longer need to be in writing or “include a full statement of the acts and omissions, with pertinent dates, which are believed to constitute the violations.” Instead, the new rule provides that complaints “need not be in any particular form,” may be made orally or in writing, may be filed in any language, and may be filed by any person on the employee’s behalf.
Similarly, the new rule seeks to make the complainant’s burden of proof consistent with OSHA’s treatment of claims under other whistleblower statutes. Sarbanes-Oxley does not address the evidentiary standard that applies to a complainant’s showing that his or her protected activities were a contributing factor in an adverse employment action. Instead, it simply provides that the Secretary may find a violation only “if the complainant demonstrates” that protected activity was a contributing factor in the alleged adverse action. The new OSHA rule clarifies that the complainant must prove by a “preponderance of the evidence” that his or her protected activity contributed to the adverse action. If the complainant makes this showing, the burden shifts to the employer to prove by “clear and convincing evidence” that it would have reached the same decision even in the absence of the protected activity.
The new interim final rule also revises the regulations governing reinstatement. Whereas the prior regulations provided that reinstatement would not be appropriate where the respondent establishes that the complainant is a security risk. Under the new rule, the determination of whether reinstatement is inappropriate in each instance will be made “on the basis of the facts of each case and the relevant case law.” Moreover, where it deems appropriate, OSHA may now order “economic reinstatement,” instead of the usual remedy of preliminary reinstatement. Such economic reinstatement provides the complainant with the same pay and benefits that he received prior to his termination, or front pay, but does not require the complainant to actually return to work. An employer does not have a statutory right to choose economic reinstatement, and does not have a statutory right to recover the costs of such an economic reinstatement if the employer ultimately prevails in the whistleblower adjudication.
Interested parties can submit comments concerning the rulemaking within 60 days of its publication in the Federal Register today, November 3, 2011.