Other Non-Sox Anti-Retaliation Laws Created Or Strengthened By Dodd Frank (Part I)

Private Cause Of Action For Retaliation Under Dodd-Frank Section 1057, Relating To The Consumer Financial Protection Act of 2010

Dodd-Frank prohibits retaliation against “any individual performing tasks related to the offering or provision of a consumer financial product or service” who has engaged in protected activity. Dodd-Frank Act § 1057. Protected activity includes: (i) providing information about potential violations of financial consumer protection laws to the employer, the newly created Bureau of Consumer Financial Protection, or any other state, local, or federal, government authority or law enforcement agency; (ii) testifying in connection with financial consumer protection enforcement proceedings; (iii) commencing a proceeding under federal consumer financial law; or (iv) objecting to or refusing to participate in any activity that the employee reasonably believed to be in violation of any financial consumer protection law.

Dodd-Frank requires financial services employees to administratively exhaust whistleblower retaliation claims by filing a complaint with the U.S. Department of Labor within 180 days after the date of the alleged retaliation. As with SOX retaliation claims, this complaint will trigger a multiple stage process, which may involve an investigatory phase, a written determination by the Labor Department of whether reasonable cause exists to believe that the complaint has merit, a preliminary order of relief, and a hearing on the record. As with SOX retaliation claims, the employee’s burden during this process is to establish that the protected activity was a “contributing factor” in the alleged “unfavorable personnel action.”

The employer may rebut the employee’s case with “clear and convincing” evidence that it would have taken the same action in the absence of the protected activity. Remedies for retaliation include reinstatement, back pay, compensatory damages, and award costs and expenses. If the Labor Department fails to issue a final order within 210 days after the filing of the complaint, or within 90 days after receipt of the reasonable cause determination, the employee may bring an action in U.S. District Court, in which either party may request a jury trial.

If the Labor Department issues a final order within the prescribed time limits, “any person adversely affected or aggrieved” by the final order may file a petition for review with the U.S. Court of Appeals. Financial services employees may not waive these rights. Further, pre-dispute arbitration agreements covering these claims are invalid, except if contained in a collective bargaining agreement. This union exception applies only to financial services employees, but Dodd-Frank expressly permits the Bureau of Consumer Financial Protection to eliminate the exception by rule if the bureau determines that arbitration agreements in collective bargaining agreements are inconsistent with the purposes of Dodd-Frank.

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.

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