Two u.s. senators accused the department of labor of violating the

Two U.S. senators accused the Department of Labor of violating the “spirit and goals” of a federal law aimed at protecting employees who report corporate wrongdoing and called on the agency to stop rejecting claims from workers at subsidiary companies.

In a letter to Secretary of Labor Elaine Chao, Sen. Patrick Leahy, a Vermont Democrat who is chairman of the Judiciary Committee, and Sen. Charles Grassley, an Iowa Republican who also is on the committee, wrote that they were dismayed that the “administration — the Department of Labor in particular — has been using overly restrictive interpretation of this law to dismiss a majority of the complaints” filed under the whistleblower-protection provisions of the 2002 Sarbanes-Oxley Act.

Sen. Leahy and Sen. Grassley, who wrote those provisions, said that “there is simply no basis to assert” that employees of the subsidiaries of publicly traded companies aren’t covered under the act, as the department has asserted in numerous recent cases.

The letter cited an article in The Wall Street Journal last week that reported on the department’s stance. Department records show the government has ruled in favor of corporate whistleblowers 17 times out of 1,273 complaints filed since 2002. An additional 841 cases have been dismissed, the records show, with many of the dismissals made on subsidiary-exclusion grounds. The rest of the cases are either pending, withdrawn, or were settled.

Related Reading:

Read the letter sent by Sen. Patrick Leahy and Sen. Charles Grassley to Secretary of Labor Elaine Chao. (Links to an external site.)

In a statement, the Labor Department said it would respond fully to the concerns of the senators. But the agency said, “We are confident we are correctly enforcing the statute, and do not believe the text of Sarbanes-Oxley as written supports the broader reading that employees of subsidiaries are automatically covered.”

Tom Devine, legal director of the Government Accountability Project, a nonprofit group that promotes whistleblower rights, called the department’s stance “dysfunctional,” saying: “This one is a no-brainer. There is nothing in the law that allows for that type of loophole.”

The senators asked the department to supply documentation and a response supporting the agency’s position — and until that time, to suspend its interpretation that exempts employees of subsidiaries.

The department’s Occupational Safety and Health Administration enforces the whistleblowers’ provisions, which prohibit publicly traded companies or “any other officer, employee, contractor, subcontractor, or agent of such company” from retaliating against employees who provide information or assist in investigations related to the alleged fraud.

In their letter, the legislators wrote that the whistleblower provision was a direct response to fraud perpetrated by Enron Corp., “through the misuse and abuse of its shell corporations and subsidiaries.”

Cases dismissed on the subsidiary-exclusion rule include whistleblower complaints against the German manufacturing conglomerate Siemens AG, London media titan WPP Group PLC; ING Groep NV of the Netherlands; Alabama insurer Torchmark Corp.; and Florida investment firm, Rayond James Financial Inc. The companies have declined to comment on the cases.

Another pending case involves UBS AG, the Swiss bank. An attorney says the Labor Department has asked him to show that the UBS unit that employed his client is covered under the act. UBS declined to comment. Jennifer Levitz, (Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved, Reprinted with permission, ED. P. 2019)

Under California Labor Code Section 1102.5, the law “prohibits retaliation against an employee who disclosed, or the employer believes the employee disclosed or may disclose, inform to certain government agencies, or those who authority over the employee or authority to investigate, discover or correct the employer’s violation or noncompliance, or for providing information to or testifying before, any public body conducting an investigation, hearing or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of, or noncompliance with a local, state or federal rule or regulation, regardless of whether disclosing the information is part of the employee’s job duties.”

If a whistleblower has a reasonable suspicion that a violation of a local, state or federal rule of regulation occurred, the employee’s motivation for reporting the conduct is irrelevant to whether the disclosure is a protected activity. (Mize-Kurzman v. Marin Community College District (2012) 202 Cal.App.4th 832)

Research:

Leahy, Grassley Press for Update on Labor Department’s Handling of Whistleblower Cases, Oct 07, 2010

https://www.grassley.senate.gov/news/news-releases/leahy-grassley-press-update-labor-department%E2%80%99s-handling-whistleblower-cases (Links to an external site.)

Sarbanes-Oxley Act: Legal Protection for Corporate Whistleblowers, By Stephen M. Kohn,

https://www.whistleblowers.org/index.php?option=com_content&task=view&id=27 (Links to an external site.)

Occupational Safety and Health Administration (Links to an external site.)

EMPLOYEE PROTECTION PROGRAM

https://www.whistleblowers.gov/ (Links to an external site.)

War on Whistleblowers (Video: Go to FCC Website, Click on FCC Library – Click on Research Databases click on “Flims on Demand”; type in War on Whistleblowers)

http://fod.infobase.com/p_ViewVideo.aspx?xtid=93966&tScript=0 (Links to an external site.)

General Information About Whistleblowing and Retaliation

https://www.workplacefairness.org/general-whistleblowing#9 (Links to an external site.)

How Companies Should Respond to Whistleblower Complaints

by Paul B. Murphy (Links to an external site.), Amelia R. Medina (Links to an external site.) and James L. Michaels (Links to an external site.) | December 2, 2014 at 6:01 am

http://www.rmmagazine.com/2014/12/02/when-the-whistle-blows-how-companies-should-respond-to-whistleblower-complaints/ (Links to an external site.)

Mize-Kurzman v. Marin Community College District (2012) 202 Cal.App.4th 832

https://scholar.google.com/scholar_case?case=11992106401558975700&q=Mize-Kurzman+v.+Marin+Community+College+District&hl=en&as_sdt=2006&as_vis=1 (Links to an external site.)

Questions for your Paper:

• Write a brief introduction to the paper as to what this case is about, include the whistleblower-protection provisions of the 2002 Sarbanes-Oxley Act, specifically of California’s Whistleblower Statutes?
• After doing your research based on the information above, are the employees of subsidiaries covered under the SARBOX Act? Why or why not? If not, shouldn’t they?
• Was the Department of Labor “violating the “spirit and goals” of a federal law aimed at protecting employees who report corporate wrongdoing?” Why or why not? Write a compelling argument.
• As an employer, supervisor, manager, HR Director, etc., what are your specific responsibilities towards employees who have, or may be preparing to “blow the whistle”, on your companies’ practices or policies according to Section 1102.5 of the California Labor Code?
• How should companies go about properly engaging in the activity of correcting the issues raised by the whistleblower?
• Conclusion: Regarding the Mize-Kurzman v. Marin Community College District (2012) 202 Cal.App.4th 832); “In this case, the trial court allowed the jury to consider the evidence of plaintiff’s retirement benefits on the issue of damages. It allowed the jury to determine whether to reduce her damages, if any, and the amount by which any damages would be reduced. No California case cited by the parties or found by us [Opinion of the Court] discusses the question whether the availability of retirement benefits may be considered in mitigation of damages sustained by a wrongfully terminated or demoted employee.” Therefore, “The judgment is reversed and the matter remanded for retrial in accordance with the views set forth herein. Plaintiff shall recover her costs on this appeal.” In your conclusion of this paper, discuss the importance of this case and its significance, in your own words as to how this effects the business environment from a legal standpoint. Also briefly discuss the ramifications, had this case not been remanded, and how it could have effected existing Whistleblowing laws on a state and federal level.

Other requirements: MLA Format, works cited page, no plagiarism.