A recent holding by the Second Circuit shows that companies can no longer win easy dismissal of employees' claims of retaliation under the Sarbanes-Oxley Act. Many more whistleblower cases are reaching discovery — and as a result, employers should treat all such claims with extra respect.
This article by TELG principal Tom Harrington and TELG managing principal R. Scott Oswald was published by Corporate Counsel on December 4, 2014. The full article is available at Corporate Counsel. (Site requires registration.)
Defining Protected Activity Under SOX
In the courtroom, a business transaction, or on a ball field, a loss can also be a victory. Such is the case for employees in the matter of Nielsen v. AECOM Technology, decided by the Second Circuit Court of Appeals in August 2014. Employment law practitioners eagerly awaited the court's decision on the appropriate standard for evaluating whether a plaintiff engaged in protected activity under the Sarbanes-Oxley Act's (SOX) whistleblower protection provisions. The court found against the plaintiff, an employee of AECOM Technology, but in doing so, became the latest circuit to hold that employees need not "definitively and specifically" identify a particular securities law or category of fraud in order to be protected from retaliation. This is a significant victory for employees.
In this article, we provide a brief history of how the "definitively and specifically" standard came to be, how the tide began to turn against the application of this standard, and what this means for practitioners and employees who blow the whistle on securities fraud.