Justin M. Swartz and Juno Turner, Labor & Employment Law, Section of Labor and Employment Law, American Bar Association, Winter 2013, Volume 41, Number 2
Arbitrability Of Sarbanes-Oxley Whistleblower Claims
This article explores the arguments presented by member firms and registered employees, and outlines what arbitration panels have decided. Laurence S. Moy. Pearl Zachlewski, Linda Neilan, and Katherine Blostein. The Neutral Corner, Newsletter of FINRA Neutrals, Volume 1, 2008.
Since the passage of the Sarbanes-Oxley Act of 2002 (SOX), arbitrators handling employment claims may be faced with a throny question concerning SOX whistleblower claims: Should a SOX claim be litigated in court or arbitrated? Ultimately, the question comes to whether SOX whistleblower claims constitute "employment discrimination" claims, and are thus exempt from arbitration under Rule 13201 of the Code of Arbitration Procedure for Industry Disputes (Code). This article explores the arguments presented by member firms and registered employees and outlines what arbitration panels have decided.
Justin Swartz and Rachel Bien, Section of Labor & Employment Law, American Bar Association, Vol. 35, Number 4, Summer 2007
Few doubt the merits of diversity in the workplace. Indeed, a host of organizational leaders from chief executive officers to top military brass have recently touted the importance of a diverse labor force. As a result, an entire industry has emerged, geared toward eradicating workplace inequality.
Many thoughtful ideas have made their way onto "best practices" lists that identify methods to increase the representation of historically underrepresented groups in corporations and firms.
Despite all of this attention, however, the challenge of actually achieving diversity remains. As Alexandra Kalev, Frank Dobbin, and Erin Kelly wrote in a recent article examining the effectiveness of employers' efforts to promote diversity, "We know a lot about the disease of workplace inequality, but not much about the cure." "Best Practices or Best Guesses? Assessing the Efficacy of Corporate Affirmative Action and Diversity Policies," 71 Am. Soc. Rev. 589, 590 (August 2006).
At the 2007 National Conference on Equal Employment Opportunity Law in Charleston, South Carolina, the Section's Equal Employment Opportunity Committee (EEOC) presented two panels that focused on efforts to increase diversity in private sector workplaces, including law firms. The consensus that emerged from both panels was clear: truly overcoming inequality in the workplace requires more than changing hearts and minds. It demands a structural, top-down approach with incentives for meeting concrete diversity goals.
Anne Golden and Piper Hoffman, The Employee Advocate, Spring/Summer 2006
When Good Deeds Are Punished: The Legal Landscape of Retaliation and Whistleblowing
Co-authored by Laurence S. Moy and Nantiya Ruan, 745 PLI/Lit. 581 (2006)
Whistleblower Claims Under The Sarbanes-Oxley Act Of 2002
Laurence S. Moy, Linda A. Neilan, and Hollis Pfitsch (Summer Associate), Practising Law Institute, October 7-8, 2004, and December 9-10, 2004.
In the wake of recent accounting and corporate scandals, Congress passed the Sarbanes-Oxley Act of 2002 (hereinafter, “Sarbanes-Oxley,” “SOX,” or the “Act”), Public L. No. 107-204, Sec. 806, codified at 18 U.S.C. § 1514A.1 In addition to providing greater oversight of the accounting industry and protecting investors, the Act prohibits employers from retaliating against whistleblowers. (“Whistleblower” might be considered a misnomer since the Act’s scope is not limited to employees who “blow the whistle” by refusing to engage in illegal or wrongful acts or by reporting such activities to the employer or the appropriate authorities.) The Act provides extensive coverage to employees who report improper conduct as well as employees who participate in proceedings relating to same. Companies that fall under the purview of Sarbanes-Oxley are prohibited from discharging, demoting, suspending, threatening, harassing, or discriminating against any employee who engages in protected activity. 18 U.S.C. § 1514A(a).
Prior to Sarbanes-Oxley’s enactment, federal and state whistleblower statutes provided limited protection for a narrow class of employees. The False Claims Act covers employees only if they report fraud on the federal government. 31 U.S.C. § 3730(h).2 In New York, a state statute had provided pre-Sarbanes-Oxley whistleblowers with extremely limited coverage. That statute, New York Labor Law § 740, only protects an employee who “discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer that is in violation of law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety.” N. Y. Lab. Law § 740(2). Thus, Sarbanes-Oxley has vastly changed the horizon of protection for whistleblowers in the private sector.
This paper addresses the whistleblowing provisions of the Act and its accompanying regulations, provides guidance to lawyers advising companies responding to potential whistleblower complaints of improper conduct, and reviews the duties of lawyers to report wrongful conduct as per the Securities and Exchange Commission’s (“SEC” or “Commission”) new regulations.