Amanda DeMatteis: Hi, Josh.
Josh Goodbaum: Hi, Amanda. What are we talking about today?
DeMatteis: We’re gonna talk about whistleblowers today, Josh. People hear “Sarbanes-Oxley”
and “Dodd-Frank,” and they immediately think of Wall Street. But should employees that don’t work on Wall Street care about these two federal laws, and why?
Goodbaum: Absolutely, Amanda, because these are two of the main federal laws that protect whistleblowers.
If you work for a publicly traded company – any company that’s traded, for example, on the New York Stock Exchange or the NASDAQ – or for a contractor or a subsidiary of one of those companies, and you report fraud, these laws can protect your job. Under Sarbanes-Oxley, that means reporting things like securities fraud, mail or wire fraud, bank fraud, or violations of the rules of the federal Securities and Exchange Commission (or SEC).
And importantly, you don’t have to be right about whether there was fraud occurring. You just need a reasonable belief that something illegal is going on in your company.
DeMatteis: Josh, we hear all the time from employees who are afraid, sometimes rightly so, to make these complaints, either in-house or to a government agency.
What do you say to them?
Goodbaum: Both of these laws, Amanda, prohibit retaliation, and that’s a critical part of both Sarbanes-Oxley and Dodd-Frank. But they prohibit retaliation in different ways. Let’s talk about that.
Under Sarbanes-Oxley, you only have to report your concern internally – to your supervisor or your compliance department, for example. And if you’re retaliated against because you reported that concern, even internally, you only have to prove that your protected conduct was a “contributing factor” in the negative thing that happened to you as a result. That’s a lower standard than under most employment laws, so that’s very pro-employee. On the other hand, under Sarbanes-Oxley, you only have 180 days from the time that you experience that retaliation to make a formal complaint of retaliation, so you have to move very quickly.
Dodd-Frank gives more damages than Sarbanes-Oxley, including potentially double penalty damages, and it has a longer limitations period. An employee can file a complaint up to six years after they’ve experienced retaliation. But to engage in protected activity under Dodd-Frank, you have to report your concern directly to the SEC. Reporting a concern internally to your employer – to your manager, to the compliance department – isn’t enough to implicate the protections of Dodd-Frank.
DeMatteis: And Josh, what do we tell an employee, whether they’re on Wall Street or not, who thinks that they have witnessed or been asked to engage in fraud at work?
Goodbaum: Write down what you saw, Amanda, and when, and talk to an employment lawyer as soon as possible, ideally before you make your whistleblower complaint, but certainly after you report that fraud, and especially if anything negative happens to you.
The choices you make at the beginning, like who to report to and when to report, can dictate which protections you have under each of these laws and can dictate what your employment lawyer might be able to accomplish for you if you experience any retaliation.
DeMatteis: Thank you so much, Josh. This is really critical information, and frankly, complicated for lawyers, let alone non-lawyers.
If you’re having issues with whistleblower protection, Sarbanes-Oxley, Dodd-Frank, or anything else at work, please reach out.
Thank you so much for watching, and we’ll see you next time.