Should your publicly traded company be accused of violating the anti-retaliation provisions of the Criminal Fraud Accountability Act of 2002, also known as the Sarbanes-Oxley Act, the Occupational Safety and Health Administration ("OSHA"), whose mission is "to save lives, prevent injuries and protect the health of America's workers," will conduct the investigation, not the Securities and Exchange Commission ("SEC"), as you might expect.
The Sarbanes-Oxley Act, passed in the wake of the Enron and WorldCom scandals, provides civil and criminal protections for "whistleblowing" employees of publicly traded companies, as well as their contractors, subcontractors, or agents. The Act prohibits employers from firing, demoting, harassing, or taking adverse action against employees for providing information to their supervisors or the government relating to securities fraud. OSHA is the federal agency charged with enforcing with the new regulations.
OSHA, which already has responsibility for investigating whistleblower complaints under thirteen other federal statutes, will be learning about the regulations governing publicly traded companies on the fly. OSHA candidly admits that Sarbanes-Oxley presents its investigators with a different and more difficult challenge than the other thirteen laws, all of which involve safety, health, or environmental issues. Not to worry though -- since Sarbanes-Oxley involves securities fraud, OSHA supervisors attended approximately two days of training, conducted by attorneys from the SEC. What does all this mean for you and your company?
A complaining employee's belief that a securities law was violated must be reasonable. You and your counsel probably have a better understanding of securities law than the OSHA investigators and Department of Labor Administrative Law Judges involved in your case. Careful presentation of the facts and applicable securities law is therefore crucial to resolving the investigation at the earliest stage. If you can demonstrate that the employee's complaint is frivolous, or that it was brought in bad faith, you can even recover reasonable attorneys' fees.
While you and your attorneys will want to educate the OSHA investigators, do not go overboard. Anything you submit to OSHA may be available to the public (including your own employees and shareholders) through the Freedom of Information Act. If that prospect is not enough to scare you, be aware that the SEC and other regulatory agencies are automatically notified of any whistleblower complaint filed with OSHA. Thus, when responding to an OSHA investigation, you must remember that your audience is much larger than the OSHA investigator or Administrative Law Judge with whom you are dealing.
Do not miss your deadlines: if you do, you will be forever barred from seeking relief in the "cleansing baths of judicial review." OSHA's rules governing the investigation and adjudication of whistleblower claims contain expedited procedures for administrative resolution. After receiving a retaliation complaint, OSHA must give the employer written notice of the charges. The employer only has 20 days in which to respond with a written statement and any supporting materials. In the meantime, OSHA conducts an investigation to determine whether there is reasonable cause to believe retaliation occurred. At the end of its investigation, OSHA will issue a preliminary ruling. The employer has 30 days to appeal this preliminary ruling to the Administrative Law Judge. Any preliminary ruling not appealed within 30 days becomes final and is not subject to judicial review. Should the Administrative Law Judge rule against your company, he or she will recommend that the Assistant Secretary of Labor make that ruling final. If the Secretary agrees with the Administrative Law Judge, you have 60 days to appeal to the United States Court of Appeals for the Circuit in which the violation occurred. Since the Court of Appeals may be the first place in which your company gets ample opportunity to present the issues to an informed panel of justices, it is critical that you keep these deadlines firmly in mind.
Follow these simple guidelines and your company may escape its encounter with OSHA unscathed.