SOX rules protect company whistle-blowers from wrongful termination of employment

by on June 1, 2009 · 0 Comment POSTED IN: HR Info Center

Informing supervisors about SOX violations is a protected activity

We’ve alerted readers in the past about the HR impact of whistle-blower provisions under Sarbanes-Oxley, and the risks in taking any adverse employment action.

A recent case brings that point home. Securities analyst Margot Getman felt pressured by senior members of her firm to issue a strong buy opinion on a particular stock. She refused to do so.

Was refusal protected?
Shortly thereafter she received notice of her termination of employment, and filed a complaint under SOX, claiming retaliation for her refusal to sign a strong buy recommendation. She argued this was a protected activity under SOX.

A DOL administrative law judge agreed her termination of employment was unjustified, ordering her employer to ante up back pay and other relief.

The company prevailed on appeal, but only because Getman did not explicitly communicate to her superiors that she felt pressured to violate the law prior to her termination of employment.

The court said informing immediate supervisors about a potential violation of the law is a protected activity. Simply refusing to engage in a potentially unlawful practice is not.

While the company eventually won, it could have avoided a costly battle by training managers to avoid even the appearance of retaliatory adverse action.

Cite: Getman v. Southwest Securities, Inc., No.04-059, U.S. DOL, 7/29/05. HR 4.2

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