IMPACT OF SARBANES-OXLEY ON EMPLOYMENT LAW
The Sarbanes-Oxley Act of 2002 ("SOX") was passed in response to a number of major corporate and accounting scandals. SOX, which is administered by the Securities and Exchange Commission, established, in part, a requirement that all U.S. public companies evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting and that financial reports be certified by chief executive officers and chief financial officers. With regard to employment practices, SOX also makes it illegal for publicly traded companies, including their contractors, subcontractors, agents, or subsidiaries, to take negative action against employees for blowing the whistle on various improper financial practices. SOX has become one of the most important whistleblower protection laws in the United States as more employees are reporting allegations of corporate wrongdoing under its provisions.
The SOX whistleblower provisions protect employees of publicly held companies, including its contractors, subcontractors, agents, or subsidiaries, who provide information or assist in an investigation involving company conduct they “reasonably believe” violates certain laws, rules, or regulations, including a rule or regulation of the Securities and Exchange Commission, any federal law related to fraud against shareholders, or any law related to wire, mail, or bank fraud. An employee who reasonably believes and alleges a violation has engaged in “protected activity” and can’t be discriminated or retaliated against for making the allegation. SOX provides employee protections allowing those corporate fraud whistleblowers who file complaints with the Department of Labor/OSHA within 90 days to win reinstatement, back pay and benefits, compensatory damages, abatement orders, and reasonable attorney fees and costs.
Jackson & Campbell's Employment Law Practice Group can help companies understand the implications of SOX and the associated whistleblower protection provisions. We can advise employers on changes to policies and procedures to comply with the human resources implications of SOX, including updating retaliation policies to include protection for employees who report conduct they reasonably believe constitutes a violation of federal securities law and establish procedures by which employees can make confidential, anonymous complaints, and document retention guidelines to comply with regulations for collecting relevant documents.
The contents of this Employment Law Alert are intended for general informational purposes only and should not be considered legal advice. Moreover, the mailing of this Employment Law Alert is not intended to create nor does it constitute an attorney-client relationship.
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