The sweeping Sarbanes-Oxley (“SOX”) legislation, signed into law in 2002 following the Enron and WorldCom financial scandals, was designed to police the internal financial accounting practices of publicly traded companies. One of the most important enactments was a procedural mechanism for corporate whistleblowers to bring corporate wrongdoing to the government’s attention and thereby ward off the widespread and lasting damage that can result from the undiscovered malfeasance of publicly traded companies. Remedies under SOX include claims for employer retaliation against whistleblowers who report improprieties up the corporate chain of command.
Unfortunately for whistleblowers, SOX’s complex whistleblower-protection procedures can be a barrier to relief for victims of such retaliation. These procedures include both an administrative component—via the U.S. Department of Labor—and a judicial component that permits a whistleblower to seek de novo review of an adverse administrative ruling in federal court once the administrative process has been exhausted. This jurisdictional interplay, however, provides many potential traps for the unwary litigant.
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