October 28, 2021

Volume XI, Number 301

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October 28, 2021

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DOL, Courts Interpretations of SOX Grow More Divergent

Much attention has been focused recently on the Obama administration’s reshaping of the NLRB and the controversial actions the reconfigured Board has taken. The same phenomenon has been occurring, albeit more quietly, with the Department of Labor’s Administrative Review Board (“ARB”). Within the past two years, the membership of the ARB has been completely restructured. From mid-2011 to the present, the new ARB has issued several opinions which radically expand whistleblower protections under the Sarbanes-Oxley Act (“SOX”) and reverse or undermine the more employer-friendly precedents from the previous administration. For example, the new ARB has issued opinions broadening SOX coverage with respect to non-publicly traded companies and expanding the scope of conduct that will be considered protected activity and the types of actions that constitute actionable retaliation.

Federal courts, in contrast, have almost uniformly refused to adopt the ARB’s liberal interpretations. Most recently, the First Circuit in Lawson v. FMR, LLC, held that an employee of a contractor of a publicly traded company was not protected under SOX. At issue was statutory language providing that no “publicly traded companies … or any officer, employee, contractor, subcontractor or agent of such company” may retaliate “against an employee.” The court concluded that the term “employee” refers only to the employees of publicly traded companies, and therefore an employee of a contractor or subcontractor is not covered. The ARB, in contrast, has opined that this same provision is to be interpreted in “an all-encompassing manner” in favor of whistleblowers.

This trend is significant because, following an initial OSHA determination, SOX claimants have a choice of forum – they may pursue an appeal before a DOL ALJ or, if a final decision has not been issued within 180 days, they can opt to file a de novo action in federal court. As the ARB’s and the courts’ interpretations of SOX grow more divergent, the choice of forum may have important consequences for employers.

©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume II, Number 67
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Greenberg Traurig’s Labor & Employment Group provides national and international corporations with strategic legal advice on all matters concerning the employment relationship. With over 150 practitioners around the globe, we offer national and international organizations strategic and practical legal services that are focused on maximizing human resource potential.

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