Important sections of the Final Rules relate to the retaliation protections for whistleblowers under Dodd-Frank, which broadly prohibits employers from discharging, demoting, suspending, threatening, directly or indirectly harassing, or “in any other manner” discriminating against a whistleblower in the terms or conditions of employment. 15 U.S.C. § 78u–6(h)(1)(A).
Expansion of Who Is Protected
The Final Rules expressly state that the retaliation protections under Dodd-Frank apply regardless of whether a whistleblower is ultimately entitled to an award. Final Rules at 18. This is another provision that the SEC states is intended not to “unduly deter whistleblowers from coming forward with information.” Thus, in order to be protected by the anti-retaliation provisions, the complainant need only have a “reasonable belief” that the information being provided relates to a “possible” violation of the federal securities laws. Id. at 15.
This approach is similar to that taken in Sylvester v. Parexel Int’l LLC, No. 07-123, 2011 WL 2165854 (ARB May 25, 2011) (en banc), a decision by the DOL Administrative Review Board interpreting the whistleblower protection provisions under SOX, that is discussed later in this paper. The SEC’s Final Rule on Dodd-Frank, and the Parexel decision, significantly expand those who are considered to have engaged in protected activity.
Expansion Of Protected Activity
Dodd-Frank provides whistleblower retaliation protection to any of the following activities:
— Providing information to the SEC;
— Initiating, testifying, or assisting in an investigation, or a judicial or administrative action of the SEC based on or related to information provided by the whistleblower; and
–Making disclosures required or protected under SOX or any other law, rule or regulation subject to the SEC’s jurisdiction.
15 U.S.C. § 78u–6(h)(1)(A)(iii).
More Avenues For Enforcement And An Expanded Statute Of Limitations
The combination of the Final Rules and the provisions of the statute itself make Dodd-Frank very hospitable to whistleblower retaliation claims.
Direct Access To Federal Court. The SEC added a provision to the Final Rules expressly stating that it has authority to enforce the anti-retaliation provisions of the Act. Id. at 18. Thus, in contrast to SOX, which has only one avenue for a whistleblower retaliation complaint (filing a complaint with the DOL) under Dodd-Frank an employee can bring a complaint to either the SEC or the DOL, or file a claim directly in federal court. 15 U.S.C. § 78u–6(h)(1)(B)(i).
A Long Statute Of Limitations. The Dodd-Frank Act itself provides a more expansive statute of limitations than SOX for a retaliation claim. Under SOX, an employee has 180 days to file a retaliation claim with the DOL (prior to its revision, that was 90 days). In contrast, under Dodd-Frank, an employee has six years from the date of the retaliatory action, or three years from when “facts material to the right of action are known or reasonably should have been known,” to file a retaliation claim in federal court. 15 U.S.C. § 78u–6(h)(1)(B)(iii). However, as an outer limit, Dodd-Frank imposes a maximum limitations period of 10 years after the date on which the violation occurs. Id.
Damages For Retaliation In Violation Of Dodd-Frank. A prevailing claimant in a Dodd-Frank retaliation case is entitled to relief which “shall include”: (i) reinstatement with the same seniority status that the individual would have had, but for the discrimination; (ii) 2 times the amount of back pay otherwise owed to the individual, with interest; and (iii) compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees. 15 U.S.C. § 78u–6(h)(1)(C).
Hat tip: An outstanding article that covers the law and final regulations in comprehensive fashion is Dodd-Frank and the SEC Final Rule: From Protected Employee To Bounty Hunter, ST001 ALI-ABA 1487 (July 28-30, 2011), which was written by Littler Mendelson, P.C. lawyers John S. Adler, Edward T. Ellis, Barbara E. Hoey, Gregory C. Keating, Kevin M. Kraham, Amy E. Mendenhall, Kenneth R. O’Brian, and Carole F. Wilder. This post is partially derived from that article.