New Labor Department Rules Undermine Corporate Whistleblower Protections

Published on August 13, 2007

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New Labor Department Rules Undermine Corporate Whistleblower Protections

DOL Seeks to Limit Federal Court Review

Washington D.C. – August 13, 2007.  The U.S. Department of Labor Occupational Safety and Health Administration (“OSHA”) published a new “Interim Final Rule” designed to undercut the ability of private sector whistleblowers to obtain federal court relief in claims under federal corporate whistleblower protection laws. The new rules, published in the Federal Register on Friday, August 10, 2007, were made immediately effective.

The new DOL rules seek to undermine a major Congressional reform implemented in the 2002 Sarbanes-Oxley corporate whistleblower law (the “SOX” law), which permitted whistleblowers to file claims in federal court after exhausting administrative procedures within the DOL.  These procedures have been incorporated into other private sector whistleblower laws, including the Energy Reorganization Act and the recently enacted transportation whistleblower laws.

The current law requires employees to file claims with the DOL, but permits them to file in federal court within 180 or 365 days, depending on the statute involved.  Federal court claims can be denied only if an employee, in “bad faith,” attempts to delay the administrative process.  Under the Interim Final Rule, the DOL set forth an unprecedented rule in which employees could be compelled to agree not to file claims in federal court in exchange for the right to conduct the discovery necessary to win a case.  If they did not agree to waive their federal court rights, the DOL could rush a case to trial, with limited or no discovery.  Such rushed trials would radically favor the corporate defendants.

The DOL also proposed language which would limit an employee’s right to file in federal court pending the review of a case before the DOL Administrative Review Board (“ARB”).  The ARB, was delegated the authority by the Secretary of Labor to issue rulings in corporate whistleblower cases. Since 2002, the ARB has ruled against the employee in every SOX whistleblower case which has gone to trial, and has gone so far as to permit corporate lobby firms, including the Chamber of Commerce and the American Bankers Association, permission to file briefs against the employee whistleblower.

According to Marshall Chriswell, Public Affairs Director of the National Whistleblowers Center, “the new rules seek to trap employees in an administrative process controlled by Bush political appointees.  Given the abysmal record of the Bush-appointed ARB, most corporate employees are now seeking independent court remedies.”

Although the DOL made the rules effective immediately, the Department set an October 9, 2007 deadline to file written objections to the Interim Final Rule.

The DOL regulation affected by the new rule is located at: USDOL Regulation 29 CFR Part 24. The

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