SOX Whistleblower Retaliation

Employees of public companies who report securities fraud are protected by federal law. If you were fired, demoted or pushed out for raising concerns about accounting, financial reporting or investor fraud, you may have a Sarbanes-Oxley whistleblower retaliation claim, with a deadline of just 180 days.

On this page: What SOX protects · Who is covered · Examples · Burden of proof · Complaint process · Recovery · SOX vs. Dodd-Frank · FAQ

Smith Trial Group evaluates Sarbanes-Oxley whistleblower retaliation claims for employees, managers and executives of public companies across Southern California. Attorney Cardon Smith spent years defending Fortune 500 companies in business litigation and served as a law clerk to a federal judge, so he understands how public companies, their audit committees and their outside counsel respond to internal fraud reports. Consultations are free and confidential.

What the Sarbanes-Oxley Act Protects

Section 806 of the Sarbanes-Oxley Act (18 U.S.C. § 1514A) prohibits covered companies from firing, demoting, suspending, threatening, harassing or otherwise discriminating against an employee for providing information, or assisting in an investigation, about conduct the employee reasonably believes is:

• securities fraud, or a violation of any SEC rule or regulation
• a violation of any federal law relating to fraud against shareholders
• mail fraud, wire fraud or bank fraud

The report can go to a federal agency, a member of Congress, or a supervisor or other person at the company with authority to investigate. Internal reports, such as to compliance, internal audit, legal or a manager, are protected. So is participating in a proceeding about the alleged fraud.

Who Is Covered

• Employees of publicly traded companies
• Employees of their subsidiaries and affiliates whose financial information is included in the parent’s consolidated financial statements
• Employees of contractors, subcontractors and agents of public companies, which the U.S. Supreme Court confirmed in Lawson v. FMR LLC (2014)
• Employees of nationally recognized statistical rating organizations

Common SOX Whistleblower Situations

• An accountant or controller objects to improper revenue recognition or reserves
• A sales executive reports channel stuffing or side agreements that inflate results
• An employee raises concerns about misleading statements to investors or auditors
• A compliance officer reports weaknesses in internal controls that management ignores
• An employee refuses to sign a false certification or alter records

Proving a SOX Retaliation Claim

SOX uses a burden of proof that favors employees. The employee must show that the protected activity was a contributing factor in the adverse action. The employer can avoid liability only by proving by clear and convincing evidence that it would have taken the same action anyway. In Murray v. UBS Securities, LLC (2024), the U.S. Supreme Court held that a SOX whistleblower does not have to prove the employer acted with retaliatory intent.

The SOX Complaint Process

1. File with OSHA within 180 days. The complaint must generally be filed with the U.S. Department of Labor’s Occupational Safety and Health Administration within 180 days of the retaliation, or of when you learned of it. It can be filed in writing or orally.
2. OSHA investigation. OSHA investigates and issues findings. Either side can object and request a hearing.
3. Hearing. A Department of Labor administrative law judge hears the case, with appeal to the Administrative Review Board.
4. Federal court option. If the Department of Labor has not issued a final decision within 180 days after the complaint was filed, and the delay is not due to the employee’s bad faith, the employee can generally take the case to federal district court, where a jury trial is available.

The 180-day filing deadline is short, and it often runs while an employee is still negotiating severance. Do not wait.

What You Can Recover

• Reinstatement with the same seniority
• Back pay with interest, including lost bonuses and benefits
• Special damages, including litigation costs, expert witness fees and reasonable attorney’s fees

SOX rights cannot be waived by an employment agreement, and pre-dispute arbitration agreements are not enforceable for SOX whistleblower claims. California claims, such as retaliation under Labor Code 1102.5 or wrongful termination, may add damages that SOX does not provide, including emotional distress and punitive damages. See California whistleblower retaliation.

SOX vs. Dodd-Frank and the SEC Whistleblower Program

Many SOX whistleblowers also consider the SEC Whistleblower Program, which pays awards of 10 to 30 percent of sanctions over $1 million when original information leads to a successful SEC enforcement action. Dodd-Frank’s anti-retaliation provision, which allows double back pay and has a longer deadline, generally applies only if the employee reported to the SEC. The right strategy depends on your facts, so talk to a lawyer before reporting externally. See our federal whistleblower lawyer page.

Our Role and Fees

We represent employees in SOX retaliation claims and related SEC whistleblower matters. We handle these cases on contingency: no attorney fee unless there is a recovery. Our employment results include a $1.5 million jury verdict and a $500,000 settlement in wrongful termination cases. Results depend on the facts of each case.

Helpful resources: OSHA: Sarbanes-Oxley Act whistleblower protection · SEC Office of the Whistleblower

Frequently Asked Questions

How long do I have to file a SOX whistleblower complaint?

Generally 180 days from the retaliation, or from when you learned of it. The complaint is filed with OSHA.

Is an internal report protected under SOX?

Yes. Reports to a supervisor or another person at the company with authority to investigate, such as compliance, internal audit or legal, are protected, as are reports to federal agencies and Congress.

Do I work for a covered company?

SOX covers publicly traded companies and many of their subsidiaries, affiliates, contractors and subcontractors. Employees of a private company that works for a public company may be covered.

Do I have to prove the company intended to retaliate?

No. Under Murray v. UBS (2024), you must show that your protected activity was a contributing factor in the adverse action. You do not have to prove retaliatory intent.

Can my employment agreement force a SOX claim into arbitration?

Generally no. Pre-dispute arbitration agreements are not enforceable for SOX whistleblower claims, and SOX rights cannot be waived by agreement.

Can I also get an SEC whistleblower award?

Possibly. If you voluntarily provide original information to the SEC that leads to sanctions over $1 million, you may be eligible for an award of 10 to 30 percent. Talk to a lawyer before you report.

Related guides: SOX whistleblower deadlines · Retaliated for reporting fraud? · Rewards for reporting fraud · Signs of workplace retaliation · How long do I have to sue my employer?