SOX Whistleblowers Protection

REPORTING WITHIN JOB DUTIES IS SUFFICIENT;

THE SOX WHISTLEBLOWER DOES NOT HAVE TO EXPRESSLY  IDENTIFY THE COMPLAINED OF ACTIONS AS ILLEGAL

In Deremer v. Gulfmark Offshore Inc., 2006-SOX-2 (ALJ June 29, 2007), the Respondent contended that the Complainant’s SOX whistleblower complaint was barred because his allegations fell within his job responsibilities and because he failed to communicate to the Respondent that he believed the conduct to be illegal. In support of the first contention, the Respondent cited several decisions in which it was found that finding irregularities as part of one’s job duties cannot constitute protected activity and  that the employer must be put on notice that the reporting is being done to expose illegal acts rather than merely warning of the consequences of its conduct. The ALJ distinguished the decisions as arising under other laws with different contexts, and returned to the purposes of SOX in interpreting the respondent’s knowledge element of protected activity. The ALJ concluded that restricting protected activity to exclude job duties would be contrary to Congressional intent. The ALJ pointed out that the legislative history of SOX explicitly discusses the case of Sherron Watkins, whose job responsibilities at Enron arguably included reporting accounting fraud. The ALJ also pointed out that, to be actionable, a SOX whistleblower complaint requires the respondent’s knowledge of protected activity, and an adverse job action to which protected activity is a contributing factor. 

As to the employer’s second contention that SOX Whistleblowers  must expressly state that he considers the conduct to be illegal, the ALJ found that an examination must be made of the context in which and to whom the statements were made. the ALJ focused on the fact that the statements were made to the controller, auditors, and an investigating law firm, all of whom should logically have recognized fraudulent behavior if the Complainant described it to them, and that publishing of fraudulent statements with the SEC was illegal. Thus, the ALJ found that the Complainant was not required to specifically state to the Respondent that the activity of which he complained was illegal.

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