If you are a victim of discrimination or sacking by your employer because you reported your employer; or, if you are a business owner or business that needs to defend against this type of action, please call Ascent Law and speak to an experienced Lindon Utah Corporate Lawyer to know your next best steps.
Most whistleblower protection statutes, such as the SOX, reinstatement is the “automatic,” “preferred,” or “usual” remedyHowever, front pay is awardable by juries, courts, or administrative agencies “as a substitute for reinstatement” in circumstances when reinstatement is not possible in order to compensate an employee for loss of future earnings.
The SOX, like most other employment laws, does not explicitly reference front pay as a remedy. However, as the Supreme Court has held, “front pay” is a “necessary part” of a “make whole” remedy in circumstances in which “reinstatement” is not a “viable option.”Front pay may be awarded where “irreparable animosity” exists between the employee and employer or where “a productive and amicable working relationship would be impossible.”In the context of the DOL whistleblower statutes, the DOL permits front pay.
The “legitimacy of back pay as a remedy for unlawful discharge” is “beyond dispute.” The SOX statute requires a court or the DOL to award back pay when an employee prevails in his or her case. Back pay awards are approximate and “uncertainties in determining what an employee would have earned but for the discrimination should be resolved against the discriminating employer.”It is fully appropriate when calculating the amount of damage to “recreate the employment history” of the victim and “hypothesize the time and place of each employee’s advancement absent the unlawful practice.” Thus, sometimes courts must “engage” in this “imprecise process that will necessarily require a certain amount of estimation” in order to make an employee whole.
Back pay awards should continue to “accrue” until an employer fully complies with a damage award, that is, until an employer makes an “unconditional offer of reinstatement.” The offer of reinstatement must be to a “comparable” job. If reinstatement is not sought by the employee, back pay generally continues to “accrue until payment” of the damage “award.”
The DOL held that back pay awards could be adjusted upward in order to compensate an employee for adverse tax consequences based on the fact that back pay for a period of years is often obtained in one taxable calendar year. However, it is incumbent upon an employee to introduce valid expert testimony in order to demonstrate the amount of additional tax liability.
Back pay awards are generally calculated on a quarterly basis. Specifically, an employee’s interim earnings “in one particular quarter” have “no effect on back pay liability for another quarter.”
Other make whole remedies and interest
Besides reinstatement and back pay, an experienced Lindon Utah Corporate Lawyer can review your case and advise you on the other remedies available to you. Although reinstatement and back pay are usually the two most significant elements of a “make whole” remedy, courts and administrative agencies are usually authorized to award other damages and award equitable or “affirmative” relief in order to ensure that an employee is truly made whole. Often these other aspects of damages can be very significant in ensuring that the impact of an unlawful discharge is remedied.
Other forms of relief awarded employee whistleblowers have included the following: reimbursement for lost overtime; an order to provide complainant with “only good recommendations”; interest on the back pay award; restoration of all pension contributions; restoration of health and welfare benefits;restoration of seniority; the provision of neutral employment references; restoration of parking privileges; the provision of necessary certifications for the employee; prohibition against laying an employee off or terminating an employee in the future except when “good cause” exists; cease and desist orders; prohibition on future employer of “derogatory communications” that would impact future employment; applicable promotions;vacation pay; salary increases; training; compensation for forced sale of assets; job search expenses; expungement of personnel file; benefits; and stock option and employee savings plan.
Damages are also fully available in a “refusal to hire” case. Prejudgment and postjudgment interest is fully available under the SOX. The DOL uses the IRS rate for underpayment of taxes for calculating the applicable interest rate, and interest continues to accrue until the judgment is paid.
An employee must prove at trial each element of damage, including future pain and suffering and future medical expenses.The record can be reopened for damages only if the employee was excusably unaware at the time of the hearing that such future damages would occur.
Special and Compensatory Damages
The SOX also permits employees to obtain compensation for “special damages.” Special damages include compensatory damages, such as “damages for emotional distress caused by an employer’s retaliatory conduct.”
Compensatory damages are designed to make the injured party completely whole and include compensation for emotional distress, pain and suffering, mental anguish, and lost future earnings. Compensatory damages are also available as compensation for harassment, humiliation, loss of professional reputation,ostracism, depression, “fear” caused by threats, “panic,” and for the “frustration experienced by victims of discrimination.”Marital or family problems caused by the retaliation may also be compensable.
Compensatory damages cannot be used to punish the employer. An employee has the burden of proof in establishing compensatory damages with “competent evidence.”
Mitigation of Damages
The SOX, like other employment discrimination laws, does not contain a statutory requirement that victims of discrimination mitigate their damages. However, employers can raise failure to mitigate as an affirmative defense to the amount of damages or scope of relief. The burden of proof to demonstrate that an employee failed to mitigate is on the employer, and the employee is given the “benefit of the doubt” on this issue
Attorney fees are awardable for “all phases of the litigation,” including appeals and for work performed during administrative proceedings. Attorney fees incurred in the preparation of an application for fees are also compensable.
The calculation of a reasonable attorney fee should not result in a “second major litigation,” and the fee petition need not “achieve technical perfection.” A fee application may be filed after the close of the administrative record. Under the civil rights attorney fee law, applications for attorney fees have been filed after the 10day period for motions to alter or amend a final judgment.
Under SOX, attorney fees incurred by an employee are “special damages.” Under 18 U.S.C. § 1514(A)(c)(2)(C), fees and costs incurred by an employee must be paid by an employer as part of the “compensation for any special damages sustained as a result of the discrimination.” This language is very different from the language used by Congress in the Civil Rights Attorney Fee Act, 42 U.S.C. section 1988, which awards fees as part of “costs,” not as part of damages. Based on this language, even if an employer voluntarily changed a discriminatory employment practice after a SOX claim was filed, an employee should still be permitted to pursue his or her discrimination case in order to recover “special damages,” such as fees and costs incurred.
Costs and Expenses
Consistent with most statutory fee provisions, the SOX requires that a prevailing employee be compensated for all costs reasonably incurred in pursuing the litigation. In this regard, costs “necessarily include all expenses incident to the litigation that are normally billed to fee-paying clients.” Like attorney fees, the costs must have been “reasonably incurred” and “sufficiently documented.”Recoverable costs have included items such as postage, reproduction, travel, meals, lodging in a “deluxe hotel,” paralegal expenses and law clerk time, supplemental secretarial costs, arbitration costs, telephone costs, long-distance calls, messengers’ fees, certified mailings, gasoline, and parking. The SOX law explicitly permits an award of expert witness fees.
The Sarbanes-Oxley corporate whistleblower protection law does not foreclose corporate employees from pursuing other federal legal remedies, even if they also file a claim under the SOX. Corporate whistleblowers are consequently free to pursue whatever legal remedies they deem most appropriate, and the fact that Congress passed the SOX does not negatively impact employee rights under other employee protection laws. The SOX permits employees to file claims de novo in federal court if the U.S. Department of Labor (DOL) does not issue a final decision on the merits of a case within 180 days of the initiation of DOL proceedings. If an employee opts to file in federal court, any other potential federal claims can be joined with the case, and state pendent claims can also be joined. Conversely, if an employee files a SOX claim within the DOL, the employee can still pursue alternative remedies in state or federal court under various legal theories, including the public policy exception to the termination-at-will doctrine. Under the public policy doctrine, some states have permitted corporate whistleblowers who expose financial wrongdoing to file claims under state law.
A SOX claim filed within the DOL can be joined with other DOL-administered claims. The SOX does not mandate any form of election of remedies.
In enacting the Sarbanes-Oxley corporate whistleblower protections, Congress intended to create a “national floor” establishing minimum federal “employee protections in the context of publicly traded companies.” Congress required all employees seeking coverage under the SOX to file a claim with the U.S. Department of Labor. An arbitration agreement would not preclude an employee’s filing such a claim with DOL or preclude OSHA from pursuing a claim on behalf of an employee.
Section 301 of the Sarbanes-Oxley Act requires that every publicly traded corporation have an independent “audit committee,” and that each such committee must thereafter “establish procedures” for employees to provide “confidential” and even “anonymous” allegations “regarding questionable accounting or auditing matters.”
Each audit committee or investigative authority assigned to handle the whistleblower complaint should regularly communicate with the employee who reported the misconduct to provide feedback on the investigation and to request additional information. Not only does this practice provide a measure of confidence in the investigation on the part of the employee, but it could also serve to save the investigators time and resources. Audit committees should avoid investigators expending months investigating a problem only to learn after the conclusion of the investigation that the complaint was not fully investigated or, even worse, that the wrong issue was investigated. These problems can be avoided if investigators regularly communicate with the complainant and / or his or her representatives during the course of the investigation.
Not only must employees know of the existence of the audit committee procedures that are created to comply with SOX Section 301, the audit committee should regularly publicize to all employees their rights under SOX to report misconduct. In addition, all employees should be informed in advance what they can expect to occur if they file a complaint with the audit committee, how complaints will be handled, how confidentiality will be maintained, and how the audit committee works to resolve complaints. Most important, both employees and management should be regularly reminded, at least on an annual basis, of the policies and procedures as well as the prohibition against retaliation against employees who report corporate fraud or other misconduct.
Formal required training programs
Employees and management should be formally trained in the SOX requirements, including the antiretaliation provisions and potential criminal penalties that were enacted by Congress. Employees and management, particularly those who have supervisory authority, should be trained on the legal requirements and company policies concerning prohibitions on retaliation. It is important that training programs not turn into indoctrination sessions where employees and management are trained how to isolate, marginalize, or discriminate against employees who complain or are perceived to complain about matters protected by SOX Section 301. Moreover, training programs are likely to become subject to review by compliance audits by the audit committee, or even outside monitoring by regulators if there is an investigation by the SEC or Labor Department. Therefore, it is essential that training programs not simply be used to communicate ways to protect or defend the company against a whistleblower complaint.
If you believe you have a claim under the SOX Act speak to an experienced Lindon, Utah corporate lawyer to know your options.
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When you need legal help from a business attorney in Lindon Utah, please call Ascent Law for your free consultation at (801) 676-5506. We want to help you.
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