The New York Times Will Need to Start Using Its Online Thesaurus

To find similes for the word "hypocritical". Really, the irony here is just too rich-the Gray Lady, ostensible supporter of equal rights, slayer of the patriarchy, champion of political correctness everywhere, can't handle a single request by its executive editor for equal pay.

Seriously, you can't make this stuff up.

Supreme Court Extends Sarbanes-Oxley Protections to Non-Public Company Contractors

The Supreme Court formally extended the whistleblower protections of the Sarbanes-Oxley Act of 2002, determining that whistleblowing employees of contractors performing work for public companies are covered by the Act's provisions against employment retaliation.

You may recall that Sarbanes-Oxley ("SOX") was enacted by Congress following the widespread malfeasance by executives of the Enron Corporation, as well as their accounting and legal service providers. The statute was enacted to control conduct of accountants, auditors, and attorneys who work with public companies. It contains fairly elaborate provisions to protect whistleblowers, who might face employer retaliation for reporting corporate misconduct such as mail or wire fraud, bank fraud or securities or commodities fraud or fraud affecting stock prices. The language relating to whistleblower protection specifically states that it applies to public companies, or officers, employees, contractors, subcontractors or agents of such companies. The question before the Court in this case was whether the statute shielded "only those employed by the public company itself" or employees of privately held contractors and subcontractors-such as investment advisors, law firms, or accounting enterprises-performing work for the public company.

This particular case involved contract employees who were performing services for mutual funds, which the Court noted typically have no actual employees. That was true in this case; the plaintiffs were hired by the defendant contractor under a contract between the defendant and the mutual fund and serving as portfolio managers for the various fund entities. After reporting what they believed was improper accounting or costing methods relating to management of the funds, the plaintiffs were terminated.  They filed administrative complaints under SOX, and then proceeded into federal court. A federal district judge initially denied the employer's motion to dismiss, but on appeal, the First Circuit granted the motion, finding that the SOX anti-retaliation provision was restricted to employees of public companies, and not third-party contractor employees.

The Supreme Court reversed, determining that the plain language of the statute indicated that it was to apply to the employees of contractors performing services for public companies. In its decision, the Court said that such an interpretation was consistent with the purpose of the statute, i.e., helping ferret out potential fraud in public company financial operation.

In an interesting side discussion, the Court noted the contractor's defense that the original statutory language was focused only on situations where a public company hires a contractor to effectuate terminations, something referred to as an "ax wielding specialist", and portrayed by actor George Clooney in the movie Up in the Air. The Court said that the history of SOX indicated that retaliatory axe-wielding specialists were not the real world problem that prompted Congress to add contractors to the statute.

Corporate lumberjacking aside, this decision potentially breaks a lot of new ground. Although, as noted by the majority, the Department of Labor already takes the position that contractors of public entities are covered by the whistleblower protections of SOX, the majority expands the scope of the coverage even further. Virtually all employees of private businesses that do business with a public company can now avail themselves of SOX protection.  And public company employees who hire other people to work for them (think babysitters and gardeners) theoretically extend SOX protection to those personal hires, as well.  The majority noted that these concerns were more theoretical than real, but employers should note that this decision now allows virtually anyone to trigger the highly invasive and expensive SOX charge investigative procedure.  So private employers must now put in place at least some of the mechanisms used by public companies to ensure compliance with SOX requirements.  Typically this takes the form of internal policies to identify potential retaliation issues and outside management of complaints that might trigger a SOX investigation.  Some of this should already be in place; virtually all employers must be aware that any type of retaliatory-like discharge opens up the potential for litigation, either under federal law, or under a variety state wrongful discharge claims. But the Court's decision broadens the range of employers who have to to examine carefully the bases for any termination decision, especially where the employee has raised a concern about the business activities of the employer in servicing the employer's customers.

Worker’s Compensation Retaliatory Discharge: Termination vs. Layoff vs. Suspension

A recent Illinois worker’s compensation retaliation case demonstrates a subtle, but important distinction for employers, especially those that use seasonal employees, or lay off workers while keeping them subject to recall.

The facts of the case, which originated out of Illinois’s 3rd District in Peoria, are a little confusing. Plaintiff was a registered nurse working in a rehabilitation unit in a medical center. She injured her knee, which required surgery to repair the damage and resulted in her having a 20 pound lifting restriction, which ultimately became permanent. This limitation disqualified the employee from her RN position; the company HR representative then mistakenly advised the employee that she was going to be terminated within 30 days if she could not find work within the medical facility. The company ultimately issued plaintiff a letter indicating she was terminated on June 18, 2008 (yes, it took 5 years for this case to make its way to just a first level appeal) and the plaintiff henceforth acted as if that was the date she was fired. In the meantime, the company attempted to rescind its termination by notifying Plaintiff that she could return to work, but by then the plaintiff had moved and taken another position with another employer.

Plaintiff sued for retaliatory discharge, under the Illinois Worker’s Compensation Act, claiming that she was fired in retaliation for filing a worker’s compensation claim. She ultimately amended this to allege not a retaliatory discharge, but rather a retaliatory failure to recall to work. Based on plaintiff’s admissions in her pleadings that she was terminated on June 18, 2008, the trial court granted summary judgment for the employer, and the Appellate Court affirmed.

The Appellate Court’s opinion raises an interesting point of law on retaliatory discharge claims with respect to worker’s compensation. Specifically, an employee who has been fired by her employer can generally only sue for retaliatory discharge. She may not sue for failure to rehire or failure to recall, which are expressly reserved, under Illinois law, for claims by seasonal employees (failure to rehire when seasonal hiring begins) or regular employees on leave or temporary layoff (failure to recall). In other words, in Illinois, a terminated employee gets only a retaliatory discharge claim. The Appellate Court noted that it would not allow a claim for failure to rehire or recall for a terminated employee because Illinois courts will not force an ongoing employment relationship between hostile parties when it can use monetary damages to compensate the unfairly terminated employee.

The vast majority of retaliation claims under workers compensation will be for retaliatory discharges, while failure to rehire/recall will be reserved for those rare circumstances where there are seasonal employees in play, or layoffs and leaves of absences occurring and the employment relationship is ongoing. Here, the plaintiff’s failure to recognize that she could not assert a retaliatory failure to rehire/recall claim since she had admitted she was terminated, worked as an effective bar to her lawsuit.