The U.S. Court of Appeals for the Fourth Circuit ruled recently that the Department of Labor’s (DOL) Administrative Review Board (ARB) impermissibly expanded the scope of the Sarbanes-Oxley Act’s (SOX) whistleblower retaliation provision, reversing a 2017 ruling in which the ARB had found that an employee was engaged in protected activity when she refused to sign a conflict of interest form she alleged contained an unenforceable arbitration provision. The ruling puts the brakes for now on a trend that began by DOL during the Obama Administration of interpreting the scope of SOX protection beyond the law’s clear statutory language.
The appeals court in Northrop Grumman v. Department of Labor, No. 17-2204 (4th Cir. June 13, 2019), concluded that SOX’s protections for employees who blow the whistle on their company’s alleged fraudulent activities covers only those activities enumerated in the statute. Here, the court found that an employee’s objection to her company’s arbitration policy and refusal to sign a conflict of interest form were not SOX-protected activities.
The Fourth Circuit observed that SOX’s “whistleblower protection provision does not extend protection to every employee complaint about possible improper or even illegal conduct. The provision prohibits retaliation only if the employee provides information regarding conduct that he or she reasonably believes violates one of the six categories listed by Congress in [SOX],” which are limited to fraudulent activity.
A copy of the court’s decision is available here.
Members of the Center for Workplace Compliance (CWC) can read more here.