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Dodd-Frank Wall Street Reform And Consumer Protection Act (Part III)

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA"). This post is the third in a five-part series on the employment law provisions of the WSRCPA. Sarbanes-Oxley Amendments. This post examines those provisions of the WSRCPA which amend the Sarbanes-Oxley Act of 2002 ("SOX"). SOX Failed To Protect Whistleblowers. In terms of protecting whistleblowers from retaliation, SOX has been a big disappointment.  SOX cost American businesses a lot of money and created lots of work for accounting firms, but it fell well short of protecting employees who valued obedience to law and conscience over a paycheck. The SOX Numbers. Since SOX became law, the United States Department of Labor ("DOL"), who investigates SOX whistleblower claims, has found in favor of whistleblowers only 25 times out of the 1,066 claims filed through June 30, 2010. If you like percentages, that means the DOL finds in favor of whistleblowers only 2% of the time. Why SOX Claims Fail. The reasons whistleblowers don't prevail in SOX claims are essentially three.  First, the DOL is, like most government agencies, understaffed.  They don't have the manpower to thoroughly investigate claims.  Second, retaliation is a matter of intent and DOL investigators don't like resolving cases over issues of intent.  Juries are much better at determining questions of intent. Third, the combination of a ridiculously short statute of limitations (90 days), narrow reading of the law defining protected conduct and who is protected led to the DOL dismissing many cases as a matter of law before even reaching the question of whether there was any retaliation. The WSRCPA takes serious steps toward addressing some of these deficiencies. The Amendments. The WSRCPA amends SOX by changing the statute of limitations from 90 days to 180 days after the employee became aware of the violation. The WSRCPA also extends the anti-retaliation protections to employees of any subsidiary or affiliate whose financial information is included in the consolidated financial statements of a publicly traded company. Lastly, the WSRCPA provides for a trial by jury of SOX claim appealed from the DOL and makes any pre-dispute arbitration or waiver agreement of a SOX claim unenforceable. The Takeaway. The WSRCPA takes some major steps toward helping SOX fulfill one of its major goals of protecting whistleblowers. GSF

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