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Whistleblower Case Invokes Employment Rule Exception

By Philip M. Berkowitz

Many have noted the unanticipated consequences of Sarbanes Oxley's (SOX) whistleblower protection. One significant question has been how, in light of the statute's remedial nature but its focus on remedying securities fraud, courts should construe its definition of protected activity. In particular, courts (and the Department of Labor administrative law judges who generally hear these cases at the outset) have struggled with SOX's requirement that to be a protected whistleblower, the employee must complain about conduct that he or she 'reasonably believes constitutes a violation of ' any rule or regulation of the [SEC], or any provision of Federal law relating to fraud against shareholders' (see 18 U.S.C. ' 1514A).

Employees have sought to extend SOX's whistleblower protection ' with mixed success ' to mere workplace matters, such as complaints about the company's business decisions, or other complaints unrelated to what Congress sought to remedy in passing SOX. Thus, the court in Harvey v. Safeway Inc. (2004 SOX 21 (DOL OAL Feb. 11, 2005)) dismissed the complaint of a grocery stock clerk who claimed that he was the object of retaliation after he complained that his employer underpaid him, in the amount of $1 an hour over a period of 4 weeks, allegedly in violation of the Fair Labor Standards Act. But the court also suggested that, if the numbers had been more significant, the result may have been different.

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