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Federal Court in New York Rules that SOX Protects Post-Employment Disclosures and Prevents Post-Employment Retaliation

In Kshetrapal v. Dish Network, the U.S. District Court for the Southern District of New York ruled that an employee stated a valid claim under the anti-retaliation provisions of the Sarbanes-Oxley Act for alleged retaliation for a disclosure he made after his employer terminated him.

Plaintiff Tarun Kshetrapal sued his former employer Dish Network LLC, for, among other things, retaliation in violation of SOX section 806. He alleged both pre- and post-termination protected activities, and pre- and post-termination retaliation for his disclosures. Under SOX, an employer may not “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act” that an employee performs in blowing the whistle on certain types of fraud.

After Dish terminated Kshetrapal, he testified in a deposition, in a separate litigation, about his internal complaints to Dish about fraudulent invoices. In its ruling, the Court rejected Dish’s argument that Kshetrapal’s SOX claim was limited to pre-termination protected activities. The Court examined the purpose of SOX, which is to “combat what Congress identified as a corporate culture, supported by law, that discourages employees from reporting fraudulent behavior not only to the proper authorities . . . but even internally.” The Court reasoned that given the purpose and language of the statute, its scope should not be interpreted narrowly and, as properly interpreted, SOX protects post-employment disclosures and prevents post-employment retaliation.

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