I’ll be the first to admit that the words “Sarbanes-Oxley Act” are likely to induce a big collective yawn from many of you out there.  Even the acronym “SOX” doesn’t liven things up.  (Then there are people, like Doug Cornelius at the Compliance Building blog who eat this stuff up.)

But here’s what you need to know as an employer: Terminated employees can bring a whistleblowing claim under SOX without using the words “fraud” but just by complaining about what they perceive to be as a violation of federal law.  Indeed, the caselaw on these claims is starting to mirror the pattern of retaliation claims — and we all know how notoriously difficult it is to defend against those types of claims.

SOX, not socks.

A relative new case out of the federal court in Connecticut illustrates this issue.  In Barker v. UBS AG (download here), the employer’s motion for summary judgment was denied on a SOX whistleblower claim. 

What does a terminated employee (who, the employer contends, was terminated during a reduction in force) have to show to get her case to trial? Initially, to establish a prima facie case, the plaintiff must demonstrate by a preponderance of the evidence that: (1) she engaged in protected activity; (2) the employer knew of the protected activity; (3) she suffered an unfavorable personnel action; and (4) circumstances exist to suggest that the protected activity was a contributing factor to the unfavorable action.

If the plaintiff meets her burden, the employer can then avoid liability if it can prove by clear and convincing evidence [a much higher standard of proof] that it would have taken the same personnel action in the absence of the protected activity.

And what is “protected activity”? This is where things differ slightly from retaliation claims. Here, as the court explains it.  the employee must she “had both a subjective belief and an objectively reasonable belief that the conduct [s]he complained of constituted a violation of relevant law” and  the employee’s communications “must definitively and specifically relate to [one] of the listed categories of fraud or securities violations” in SOX.


Continue Reading Pull Up Your SOX: The New Whistleblowing Claim Grows Up

It’s FINALLY a nice spring day outside in Connecticut (see the picture of the Connecticut River taken this morning) so no need to spend a minute more than necessary to catch up on some other employment law-related items you might have missed during the week:View of Hartford, CT

  • A topic near and dear to my heart, background checks, had

In yesterday’s post, I talked about the significant changes to COBRA that are in the new economic stimulus law. Today’s post focuses on another, less-publicized provision in the new law regarding whistleblowers.  Courtesy: Library of Congress

Employers that expect to receive funds from the stimulus package need to be aware of the provisions so that you can be in

Buried deep, deep, deep within revisions to the federal Consumer Product Safety Commission Act courtesy flickr/library of congress("CPSCA") is a new cause of action designed to protect whistleblowers of product safety (available here).

This new law, entitled The Consumer Product Safety Improvement Act of 2008,  will afford protection to both public and private employees in retail and manufacturing

A bill to provide mandatory paid sick leave to employees and a bill to provide greater protection to state whistleblowers were among the employment law-related bills that were not voted upon in the final day of the legislative session — effectively killing them. 

The Paid Sick Leave bill, S.B. 217, had passed the Senate

With the legislative session coming to a close next week, developments are heating up at a fast and furious pace.  I’ll do some quick updating and then provide a more through review when time permits.

First, the State Senate debated the Paid Sick Leave bill (S.B. 217) yesterday for about an hour, when the debate

Yesterday, I summarized a proposal by Connecticut Attorney General Richard Blumenthal to revise the state’s whistleblowing laws. The Hartford Courant reported on Wednesday that Blumenthal testified before members of the General Assembly’s black and Latino caucus on that issue.  Today, I’ll take a look at it in more detail.

As I indicated yesterday, the Hartford

On Friday, Connecticut Attorney General Richard Blumenthal proposed new legislation to change the state’s whistleblower laws.  Video from the press conference is available on Senator Edith Prague’s website

Before the changes are discussed, it is useful to understand the state already has an existing whistleblower statute, Conn. Gen. Stat. Sec. 4-61dd and that enforcement