August 25, 2004, Washington, DC. Yesterday, the US Department of Labor (DOL) issued final rules governing Corporate Whistleblower Procedures under the Sarbanes-Oxley Act of 2003 (SOX). In implementing the final regulations, the DOL rejected a request by the US Chamber of Commerce that would have seriously undermined the protections afforded employees under this Corporate Whistleblower Law.

The Chamber of Commerce unsuccessfully attempted to undermine the preliminary reinstatement provisions contained in the SOX. Under the SOX, a whistleblower can obtain a Preliminary Reinstatement Order (PRO) within 60 days of filing his or her complaint. The final regulations provide OSHA with the authority to order immediate reinstatement on the basis of its investigation. The preliminary reinstatement remains effective while the claim is awaiting a trial on the merits. Consequently, an employee can be back at work, earning a full salary, during the years of delay which often arises in civil litigation.

The Chamber proposed severely limiting OSHA’s ability to order the PROs of employees. The Chamber requested that OSHA’s authority to order such relief after an investigation be eliminated, and that an employee be forced to wait until after the trial on-the-merits to obtain his or her job back. The Chamber also attempted to limit PROs to cases in which such an order would cause “minimal disruption” to a company and that the evidence of wrongdoing was “overwhelming.” The DOL rejected these proposals, explaining its position as follows:

“[T]he Chamber commented that the regulatory exceptions to preliminary reinstatement should be broadened. They further commented that preliminary reinstatement should become effective only after the administrative adjudication has been completed . . . . The statute, however, explicitly provides that a preliminary order of reinstatement shall be issued upon the conclusion of an investigation that determines that there is reasonable cause to believe that a violation has occurred. Moreover, the purpose of interim relief, to provide a meritorious complainant with a speedy remedy and avoid a chill on whistleblowing activity, would be frustrated if reinstatement did not become effective until after the administrative adjudication.”

Stephen M. Kohn, Chairman of the National Whistleblowers Center (NWC) said, “The Chamber’s proposals were clearly counter to Congress’ intent. The Department of Labor correctly rejected this blatant attempt to misuse the rulemaking process and undermine a major federal whistleblower law.” 

According to Kohn, the SOX provision permitting OSHA to order the immediate reinstatement of a wrongfully discharged employee is an “essential and critical protection” afforded corporate whistleblowers, He stated: “The immediate reinstatement provision ensures that whistleblowers will not have to wait years for their case be heard in court. This provision will make every publicly traded corporation think twice before they attempt to fire an employee such as Sharron Watkins or Cynthia Cooper. The Chamber’s attempt to gut this aspect of the law was disappointing and very troublesome. We sincerely hope that the Chamber will work cooperatively with whistleblowers in order to promote confidence and honesty in publicly traded corporations.”