11.07.2011 OSHA Issues Interim Final Rule and Request for Comment on Amendments to Procedures for Handling Sarbanes-Oxley Whistleblower Complaints


On November 3, 2011, the United States Department of Labor’s Occupational Safety and Health Administration (“OSHA”) issued an interim final rule to govern its procedures for processing whistleblower complaints under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).  Sarbanes-Oxley prohibits retaliation by a covered company,[1] nationally recognized statistical rating organization, or any officer, employee, contractor, subcontractor, or agent of a covered company or rating organization, against any employee or contractor, for reporting mail fraud, wire fraud, securities fraud, violations of the Securities and Exchange Commission rules or regulations, or violations of any federal law relating to fraud against shareholders.  Responsibility for receiving and investigating whistleblower complaints has been designated to the Assistant Secretary of Labor for Occupational Safety and Health (“Secretary”).[2]   The interim final rule, which took effect upon publication in the Federal Register, implements the amendments made to Sarbanes-Oxley by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) and other procedures intended to improve OSHA’s handling of whistleblower complaints.[3]


Highlights of Important Rule Changes and Clarifications


  • The revised rules extend the statute of limitations for filing complaints from 90 to 180 days and permit complaints to be filed both orally and in writing, as provided under the Dodd-Frank amendments of 2010.
  • OSHA investigators are required to contact and assist a complainant in providing the information necessary to establish a prima facie claim of retaliation under Sarbanes-Oxley, i.e., that the complainant engaged in protected activity, that respondents knew of complainant’s protected activity, that complainant suffered an adverse job action (broadly defined to include any action that would deter a reasonable person in complainant’s position from reporting covered violations), and that complainant’s protected activity was a contributing factor in the adverse job action. 
  • Once served with the complaint, respondents have 20 business days to file a statement of defense and/or request a meeting with the investigator.  OSHA investigators generally visit the place of employment and take statements from all named respondents and witnesses.  The new rule makes clear that any information provided by a respondent at any stage of the investigation will be shared with the complainant, and the complainant will be given the opportunity to respond.  Remarkably, the rule fails to extend reciprocal rights to the employer, notwithstanding prior agency practice in some local offices.[4]    
  • Both the statute and the regulation require the Secretary to issue a written finding based on the results of the investigation within 60 days of the filing of the complaint, regarding whether or not there is reasonable cause to believe that the complaint has merit.  However, the failure to comply with this deadline confers no right upon respondents to have the case dismissed.
  • If the Secretary determines reasonable cause exists, the determination letter will include a preliminary order directing respondents to reinstate the complainant to his or her former position, and to pay complainant back pay with interest compounded daily (as opposed to quarterly compounding, which had been the procedure to date) and compensation for any special damages sustained as a result of the retaliation, including, but not limited to, litigation costs and reasonable attorney’s fees.[5]  If the Secretary determines that reasonable cause is lacking, the determination announces that the complaint will be dismissed.
  • Either party aggrieved by a finding contained in the Secretary’s determination letter may file objections and request de novo review and a hearing before an Administrative Law Judge (“ALJ”).  A respondent may also file a motion with the ALJ to stay enforcement of a preliminary reinstatement order, but the new regulations strictly limit the circumstances under which the ALJ may grant such relief.[6]  Should the ALJ agree to stay reinstatement, complainant is nevertheless entitled to “economic reinstatement” throughout the course of agency appeal proceedings, regardless of duration.[7]
  • Under a statutory kick-out provision, a complainant is entitled to file a federal lawsuit against respondents at any time after the administrative complaint has been pending for more than 180 days, regardless of the stage of the administrative review process.[8]  Regardless of their frustration with the DOL administrative process and associated expenditures, respondents have no such right of access to the courts while an administrative complaint is pending.
  • The 2010 Dodd-Frank amendments render unenforceable any agreement, policy, or condition of employment, including a pre-dispute arbitration agreement, waiving the right to jury trial on a Sarbanes-Oxley whistleblower retaliation complaint.  Prior to the amendments, pre-dispute arbitration agreements had been honored by the ALJ and the ARB.
  • Previously, the Sarbanes-Oxley case handling rules were silent as to a prevailing respondent’s right to recover payments made to a complainant under a preliminary order issued by the Secretary or the ALJ where the respondent prevailed on appeal.  In the new rule, the Secretary proclaims that a respondent may not recover potentially hundreds of thousands of dollars in back pay and front pay paid to the losing complainant because the statute does not authorize recoupment, proclaiming the maximum recovery to be up to $1,000.00 in attorney’s fees, but only if the complaint is deemed to be “frivolous or brought in bad faith.”      

OSHA is requesting public comment on the interim final rule.  Comments must be received by January 3, 2012.  Many of the proposed case handling changes unfairly prejudice respondents in proceedings before the Department of Labor.  If you have any questions, please contact Mary Pivec at (202) 293-8128 or or Ashley Winsky at (757) 473-5316 or



[1] Covered companies include those with a class of securities registered under section 12 of the Securities Exchange Act of 1934 or required to file reports under section 15(d) of the Securities Exchange Act of 1934, including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company. 

[2] In August 2011, the Secretary issued an order substantially reorganizing the OSHA Office of  the Whistleblower Protection Program to enhance its effectiveness in responding to federal whistleblower complaints arising under (in order of enactment) 19 different federal laws protecting public health, safety and financial security:  the Occupational Safety and Health Act, Surface Transportation Assistance Act, Asbestos Hazard Emergency Response Act, International Safe Container Act, Safe Drinking Water Act, Federal Water Pollution Control Act, Toxic Substances Control Act, Solid Waste Disposal Act, Clean Air Act, Comprehensive Environmental Response, Compensation and Liability Act, Energy Reorganization Act, Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, Sarbanes-Oxley Act, Pipeline Safety Improvement Act, Federal Railroad Safety Act, National Transit Systems Security Act, Consumer Product Safety Improvement Act, Affordable Care Act, Consumer Financial Protection Act of 2010, Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Seaman’s Protection Act, as amended by Section 611 of the Coast Guard Authorization Act of 2010, and FDA Food Safety Modernization Act. 

[3] In September 2011, the Secretary issued an instruction implementing a new OSHA Whistleblower Investigations Manual superseding the August 22, 2003 instruction.  The new rule codifies the procedural changes contained in the Manual. 

[4] In 2006, a divided panel of the United States Court of Appeals for the Second Circuit vacated a district court order directing Competitive Technologies, Inc. to reinstate a former employee who obtained a finding of reasonable cause at the close of the OSHA investigation based, in part, on one panel member’s opinion that OSHA violated the employer’s due process rights in failing to provide the company notice and the opportunity to respond to new information provided by the complainant that was cited as grounds for the reasonable cause determination.  Bechtel v. Competitive Technologies, Inc., 448 F.3d 469 (2d Cir. 2006). 

[5] If the respondent fails to comply with the preliminary order, the rule provides that either the Secretary or the complainant may file an action for enforcement in the federal district court with jurisdiction over the place of employment.  Although the Secretary has consistently maintained that the district courts have the requisite jurisdiction to enforce preliminary orders, in the preamble to the interim final rule the Secretary acknowledges that the courts have ruled to the contrary.  In the seminal case, Bechtel v. Competitive Technologies, Inc., a district court enforcement order was vacated based on the Secretary’s failure to convince the court that the statute conferred jurisdiction on the district courts to enforce non-final agency orders.  Subsequently, the United States District Court for the Western District of Virginia denied enforcement of a preliminary order based on lack of jurisdiction.  Welch v. Cardinal Bankshares Corp., 454 F.Supp. 2d 553 (W.D. Va. 2006).  Finally, in 2010, the Sixth Circuit granted emergency review of an enforcement order entered by the district court finding that the employer had raised a substantial question as to the district court’s jurisdictional authority and had demonstrated that it would suffer irreparable harm if forced to reinstate the complainant. Solis v. Tennessee Commerce Bancorp, Inc., 2010 U.S. App. LEXIS 15302, No. 10-5602 (6th Cir. 2010).  In recent months, the Secretary has issued preliminary orders against Bank of America and Bond Laboratories, Inc. entailing reinstatement and the payment of hundreds of thousands of dollars in back pay and other make-whole relief.  It remains to be seen whether the Secretary will prevail should the agency seek enforcement of such orders.     

[6] A respondent must demonstrate a substantial likelihood of success on the merits (which is extremely difficult to do at the preliminary stage) and that the balance of harms favors the granting of a stay of reinstatement.   The new rule removes the security risk exception to preliminary reinstatement but permits the respondent to offer proof that the complainant is a security risk under the balance of harm test.   

[7] The typical case processing time from the date of determination to the conclusion of appellate review by the DOL Administrative Review Board (“ARB”) is in excess of five years.  Hearings before the DOL Office of Administrative Law Judges are governed by procedural rules modeled after the Federal Rules of Civil Procedure.  Although the rules call for opening the hearing on the record within 60 days of the request for review, the deadline may be extended with the consent of the parties and frequently is extended. 

[8] Previously, the Secretary and the ARB interpreted the statute to prohibit a complainant from dismissing a Sarbanes-Oxley complaint after the case had been submitted to the ALJ following a hearing on the merits.  In 2009, the United States Court of Appeals held that such interpretation was inconsistent with the statute. Stone v. Instrumentation Laboratory Company, 591 F.3d 239 (4th Cir. 2009).  Thus far, Congress has done nothing to correct this unfair situation, which gives whistleblowers the right to two or more bites of the apple.


For more information about this topic, please contact the author or any member of the Williams Mullen Labor & Employment Team.



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