Department of Labor's Administrative Review Board Interprets Term "Adverse Action" Under SOX More Expansively Than It Is Interpreted Under Title VII

The Department of Labor’s Administrative Review Board (“ARB”) recently held that the Sarbanes-Oxley Act (“SOX”) provides greater protections to whistleblowers than Title VII provides to covered employees. Under this new decision, companies face a potential new risk from purported retaliatory actions that they may take towards their employees. Specifically, in Menendez v. Halliburton, Inc., ARB Nos. 09-002, 09-003 (Sept. 13, 2011), the ARB found that a company’s disclosure of the identity of an employee who reported alleged improper accounting practices could be deemed a breach of confidentiality and, thus, could constitute an “adverse action” under the whistleblower protections of SOX.

Under this reasoning, employers will need to be concerned about intangible actions as well as the traditional tangible actions. Previously, when asked to list the types of retaliatory actions that could not be taken against whistleblowers, employers typically would have identified actions such as discharge, demotion, loss of benefits, and decrease in wages. Failure to keep confidential a whistleblower’s identity likely would not have been on that list. Well, things seem to have changed and employers now must take further care to avoid engaging in adverse actions.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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