The senators' letter follows reports that show that the Department of Labor has dismissed more than 1000 of the approximately 1,600 cases that have been filed by whistleblowers alleging retaliation under this law. The cases were allegedly dismissed on the grounds that the employee alleging retaliation worked for a non-public subsidiary of a publicly traded parent company and was not therefore covered by the law.
"We strongly disagree with this legal interpretation. It erroneously excludes thousands of employees Congress meant to protect when it passed Sarbanes-Oxley and contradicts the spirit and intent of the overall legislation," the senators wrote.
The senators are the authors of the corporate whistleblower protection provision in the Sarbanes-Oxley Act and have been outspoken advocates for whistleblowers following the Enron scandal. The Senators have previously written to President Bush in 2002 objecting to interpretations made by White House staff following the signing of the law, to the Securities and Exchange Commission Chairman in 2004, and to Labor Secretary Elaine Chao in 2008 explaining the intent of the law. While the current administration has pledged to review its handling of whistleblower cases under Sarbanes-Oxley, it appears that it is interpreting the law in a similar fashion. The senators have asked for details of an ongoing internal review and how recent changes to the whistleblower provisions will be implemented.
Here is a copy of the text of the letter to Secretary of Labor Hilda Solis.
October 6, 2010
The Honorable Hilda L. Solis
Secretary of Labor
United States Department of Labor
200 Constitution Ave, N.W.
Washington, D.C. 20210
Dear Secretary Solis:
We authored the corporate whistleblower provisions of the Corporate and Criminal Fraud Accountability Act, section 806 of the Sarbanes-Oxley Act. Since passage of the law in 2002, we have been frustrated by the executive branch's overly restrictive interpretation of these provisions. It is our understanding that the Department of Labor has dismissed more than 1000 of the approximately 1,600 cases that have been filed by whistleblowers alleging retaliation under this law.
Many of these cases were dismissed on the grounds that the employee alleging retaliation worked for a non-public subsidiary of a publicly traded parent company and was not therefore covered by the law. As we made clear in our September 2008 letter to then-Labor Secretary Elaine Chao, we strongly disagree with this legal interpretation. It erroneously excludes thousands of employees Congress meant to protect when it passed Sarbanes-Oxley and contradicts the spirit and intent of the overall legislation.
We are optimistic that the recently passed Wall Street Reform and Consumer Protection Act will clarify any remaining confusion on this point. Section 929A of the new law makes clear that the whistleblower provisions in Sarbanes-Oxley include "any subsidiary or affiliate whose financial information is included in the consolidated financial statements of [a publicly traded] company." The legislation also extends the whistleblower protections in section 806 to employees of nationally recognized statistical rating organizations.
Additionally, we were encouraged to read in a July 22 article published by the Center for Public Integrity that Assistant Secretary of Labor David Michaels has ordered a "top-to-bottom" review of the Department's handling of claims brought under the whistleblower provisions of Sarbanes-Oxley. We would like more information about the Department's progress in conducting this review, including the scope of the review process and the timeline for its completion. We are also interested to hear about the Department's recent decision to provide employees who file whistleblower complaints a copy of employer responses to that complaint, and to learn why the Department previously withheld this information.
Whistleblowers are vital in promoting accountability and transparency, but they are also extremely vulnerable to retaliation. They need and deserve the protection of the law, and they should be able to rely on vigilant application of the law by the Department. Accordingly, we ask that you please work with staff from our offices to schedule a briefing on this important matter.
Sincerely,
PATRICK LEAHY, Chairman CHARLES GRASSLEY, Senator
