Have you ever felt the weight of silence in the workplace, knowing that speaking up could cost you your job? The recent U. S. Supreme Court decision has shifted the landscape for whistleblowers, making it easier for employees to assert their whistleblower rights under the Sarbanes-Oxley Act. In this episode of Employee Survival Guide®, Mark Carey dives deep into this groundbreaking ruling issued on February 8, 2024, which empowers employees to blow the whistle without the burden of proving retaliatory intent by their employers. Instead, all they need to demonstrate is that their whistleblowing was a contributing factor to their termination.
Mark shares the compelling case of Trevor Murray, a former UBS employee who courageously reported unethical practices and faced retaliation in the form of wrongful termination. Murray’s journey through the legal maze, including filing a complaint with the Department of Labor and winning a jury trial in his favor, serves as a powerful reminder of the importance of understanding employee rights in the workplace. This episode is a must-listen for anyone navigating employment law issues, especially those dealing with workplace retaliation, discrimination, or hostile work environments.
Throughout the episode, Mark emphasizes the critical need for employees to document specific instances of misconduct and to know their rights under the Sarbanes-Oxley Act. Whether you’re grappling with severance negotiations, facing discrimination, or simply trying to survive in a toxic workplace, understanding the legal protections available to you is essential. The discussion also touches on broader themes of employee empowerment and advocacy, making it clear that every worker deserves a safe and fair work environment.
As we dissect these pivotal changes in employment law, you’ll gain valuable insights into how to navigate workplace policies, handle work disputes, and advocate for yourself in challenging situations. Mark encourages listeners to be proactive in understanding their rights and to seek legal advice when necessary. This episode is not just about survival; it’s about thriving in your career and ensuring that your voice is heard, no matter the obstacles you face.
Join us on this journey of empowerment and enlightenment as we explore the intricacies of employment law and the vital role that whistleblowers play in fostering a culture of integrity in the workplace. Tune in to learn how you can stand up against discrimination, retaliation, and workplace harassment, and transform your work life for the better. Your survival guide to navigating the complexities of employment has arrived—don’t miss it!
Links in Episode: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https:/www.supremecourt.gov/opinions/23pdf/22-660_7648.pdf
Employees can file claims by going to the OSHA website www.osha.gov/html/RAmap.html or call OSHA at 1-800-321-OSHA (6742). For a copy of SOX, the regulations (29 CFR 1980), and other information go to www.osha.gov and click on the link for Whistleblower”.
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Speaker #0 Hey, it’s Mark here, and welcome to the next edition of the Employee Survival Guide, where I tell you, as always, what your employer does definitely not want you to know about, and a lot more. Hey, it’s Mark here, and welcome back to the next episode of the Employee Survival Guide. Today’s episode, we’re talking about how it’s easier for employees to blow the whistle under the Sarbanes-Oxley Act. On February 8, 2024, the U.S. Supreme Court issued a very favorable decision for Sarbanes-Oxley whistleblowing employees at public companies. Overriding the Second Circuit decision in New York, the decision holds that employees do not have to prove retaliatory intent to make a claim, only show that the whistleblowing was the contributing factor, a much lower standard, much lower burden, while the employer must show by clear and convincing evidence a much higher standard that it would have taken the same action otherwise. The case was brought by a fellow named Trevor Murray. He was employed as a research strategist at securities firm UBS within the firm’s commercial mortgage-backed securities business, CMBS Trading Desk. And in that role, Murray was responsible for reporting on CMBS markets to current and future UBS customers. Securities and Exchange Commission rules and regulations required him to certify that his reports were produced independently and accurately, and accurately reflected his own views. Murray contends that despite this requirement of independence, two leaders of the CMBS trading desk improperly pressured him to skew his reports to be more supportive of their business strategies, even instructing Murray to clear his research articles with the desk before publishing them. Murray reported the conduct. to his direct supervisor, Mr. Michael Schumacher, in December of 2011, and again in January 2012. Asserting that it was unethical and illegal, Schumacher expressed sympathy for Murray’s situation, but emphasized that it was very important that Murray not alienate his internal client, the trading desk. When Murray later informed Schumacher that the situation with the trading desk was bad and getting worse, as he was being left out of meetings and subject to constant efforts to skew his research. Schumacher told him he should just write what the business line wanted shortly after the exchange. And despite having given Murray a very strong performance review just a couple months before, Schumacher emailed his own supervisor and recommended that Murray be removed from UBS headcount, a.k.a. being fired. Schumacher also recommended in the alternative that if CMBS trading desk wanted him, Murray could be transferred to the desk, to a desk analyst position. where he would not have SEC certification responsibilities. The trading desk obviously declined to accept Murray as a transfer, and UBS fired him in February of 2012. Murray then began his legal escapade by filing a complaint with the Department of Labor. That’s how you start your Sarbanes-Oxley cases, and I’ll talk about that in a second. He alleged that his termination violated Section 1514A of the Sarbanes-Oxley Act because he was fired in response to an internal reporting about fraud on shareholders. When the agency did not issue a final decision on his complaint, within 180 days, Murray filed an action in federal court. Murray’s claim went to trial. UBS moved for judgment as a matter of law, arguing, among other things, that Murray had failed to produce any evidence that Schumacher possessed any sort of retaliatory animus towards him. The district court denied the motion. The district court instructed the jury that in order to prove his Section 1514A claim, Murray needed to establish four elements. And this is what you need to prove when you’re going about your Sarbanes-Oxley investigation of your own case. Number one, that he engaged in whistleblowing activity protected by Sarbanes-Oxley. And I’ll talk about what those are in a second. Two, that the UBS knew that he engaged in the protected activity. Usually you can do that by email or discussions you have verbally with your supervisors. Three, that he suffered an adverse employment action. In this case, he was fired. There are other actions the employer can take, such as demotions and… reduce wages or failure to pay bonuses. Number four, that his protected activity was a contributing factor in the termination of his employment. That is the sole contention the Supreme Court took up later on. I’ll get into that in a second. The last element, the district court further instructed the jury, quote, for protected activity to be a contributing factor, it must have either alone or in combination with other factors tended to affect in any way UBS’s decision to terminate his employment. The court explained that Murray was quote, not required to prove that his protected activity was the primary motivating factor in his termination or that UBS articulated reason for his termination was a pretext, which is a common burden shifting that you see in employment discrimination cases. If Murray proved each of the four elements by preponderance of the evidence, 51% or better, the district court instructed the burden would then shift to UBS to, quote, demonstrate by clear and convincing evidence that it would have terminated Murray’s employment even if he had not engaged in protected activity. And I’ll tell you that the clear and convincing evidence standard is a much, much higher and more difficult burden. So that’s why it becomes easier for employees to blow the whistle. During deliberations, the jury asked for clarification regarding the contributing factor instruction. The court responded the jury should consider whether anyone with any knowledge of Murray’s protected activity, because of the protected activity, affected in any way the decision to terminate Murray’s employment. When the court previewed this response, to the parties, the UBS indicated it was comfortable with that formulation of the jury instruction, which has to happen before the jury is in panel to finally decide the situation. The jury found that Murray had established a Section 1514A claim and that UBS had failed to prove by clear convincing evidence that it would have fired Murray, even if it had not engaged in protected activity. in that regard. UBS had argued to the jury, and this is pretty onerous and just outrageous on their part, that the market-wide difficulties for the firm and also a $2 billion trading loss on a trading desk in London had caused Murray’s… termination uh job elimination they called it the jury also issued an advisory verdict on damages recommending that murray received nearly one million dollars so the case then went to the second circuit second circuit in summary had stated that the um uh the that murray had to prove retaliatory intent um and reverse the decision of the jury that put it up for for certiorari to the Supreme Court of the United States and the Supreme Court came back and said, That’s not the case. And on February 8th, 2024, the court by unanimous vote of 9-0. So 9-0 is indicative of a clear precedent setting decision held in favor of Murray and all other employees who want to blow the whistle under Sarbanes-Oxley. And they said, quote, a whistleblower who invokes 18 U.S.C. section 1514A bears the burden to prove that his protected activity was a contributing factor in the unfavorable. personnel action alleged in the complaint, end quote. But he is not required to make some further showing that his employer acted with retaliatory intent. The judgment of the U.S. Second Circuit Court of Appeals was reversed and the reasons explained in the decision. The case was remanded to the lower court, in this case, the trial court, for a further decision. Basically, they were to enforce what the jury’s verdict was. And I will put… the actual case decision from the Supreme Court in the show notes. You can read it. And then I just want to just tell you what is covered by SOX, the Sarbanes-Oxley, and how to file a claim, much like Mr. Murray did. An employer cannot discharge or otherwise retaliate against an employee because he or she provided information or caused information to be provided or assisted in an investigation by a federal regulatory or a law enforcement agency, or more importantly, participated in an internal company investigation, which I’ll get to in a second, regarding alleged mail fraud, wire fraud, bank fraud, securities fraud, violations of SEC rules and regulations, or violation of federal laws relating to fraud against whistleblowers or against shareholders. Sorry. So here’s how to look for your Sarbanes case when you’re in it. Sometimes, well, you’re probably going to know it, you’re in it because you didn’t ask for it, It just came upon you. Typically, I see cases where you have a. a moderate mid-tier level executive who is jostling around trying to do their job performance, their job task, and there’s other executives who are beginning to play with the numbers. In one recent case I was involved with, it was a public company and the SEC had dinged the company for the tune of, I don’t know, a couple of hundred million dollars for improper activities, which affected the public’s disclosure on their financial statements. The case that was brought to me at that juncture by this employee had witnessed the same activity that the SEC had fined the company on and found them had violated the laws. And the company, as reported by my client, had done it again. So without naming names, this employee had the ability to recount in a very factual manner. And most employees I see, they go to a very lengthy degree. I encourage you, as you know, to… put forth in a detailed narrative all of the specifics that occur because you’re demonstrating a fraud claim and fraud has to be pled. This is a kind of a lawyer’s rule, but pled in the particularity. So. You’ve got to get names, dates of things that occurred, the statements that are being made, and you want to put it in long-form chronological narrative. That’s the best way for you to demonstrate to the company that you’re blowing the whistle and gain protection. But it also, if you want to go further and file a claim because you’re notably unsuccessful in your settlement demand negotiations with the employer, you’ve decided that you really have no way out of this situation other than going forward. You file with the Department of Labor OSHA, which is the state agency or the federal agency arm that controls this statute. And you also can file with the SEC as well. And they have a certain whistleblowing procedure for there as well. But the long form narrative is very, very important. So when you’re in the midst of this and your job’s on the line and maybe you’re unable to negotiate anything and you have no way out other than blowing the whistle publicly. That’s the hard part of these cases, everyone should understand, is how far do you go? And you want to be involved with that. And typically what reality happens about 95% of the time is that employers will make a sizable counteroffer to you into the hundreds of thousands of dollars based upon a good case. Because there’s a larger issue at play, you need to understand that the damage potential to the company is in the tune of millions of dollars. So it’s pennies in a bucket to pay you off. It’s a lot of money to you, of course, but you have to figure out what’s of concern to you in your own expectations and your own goals and your own personal life, how much you want to get involved with this. But there are procedures to do this. And so like Mr. Murray, he basically put forth his claim. The agency itself, unfortunately, didn’t do anything with it, not surprisingly. And he turned to the courts to effectuate his Sarbanes-Oxley claim. And it was successful. He had to be patient. He had to go through the Second Circuit after a jury verdict in his favor. That’s painful. I can tell you that, having gone to the Second Circuit many times. Nonetheless, in an unusual state of affairs, the Second Circuit got it wrong. They interpreted a statute. And I didn’t tell you that the Second Circuit is kind of a premier federal appeals district court appellate jurisdiction that they don’t get these things wrong normally. Normally, they’re leading the area of law in terms of establishing case law. So pretty outstanding case from the Supreme Court to come back and say the Second Circuit was wrong in that regard, because typically what happens is the Supreme Court will decide a split in authority. And there was a split between, I think, the Fifth and Eleventh Circuits here in the Second. So they did so. Judge Sotomayor was actually the former Second circuit appellate judge made the decision for the panel, the unanimous panel of the Supreme Court, and decided in the favor of Mr. Murray. So employees who experience a firing or a layoff or a blacklisting, demotion, or discipline, or intimidation may file a Sarbanes-Oxley complaint with the Department of Labor, which is the Occupational Safety Hazard Administration, OSHA, as they’re called. employees have 180 days to file the agency claim or risk waiver of that claim. That’s very important. So make sure you make a timely complaint. If you’re filing on your own, you can do that right on the website. And employees can file claims by going to the OSHA website. I’ll put those links on the show notes for you as well. There’s also a blog post posted on the website. You can read about it as well. And then I should say this, that, you know, you know, pitching employment lawyers to you, when you’re dealing with stocks claims, you’re dealing with fraud at that level with public companies, typically the employees we encounter are mid to higher level tier executives who are confronted with a situation, not really finding a way out and they’re then, because they don’t want to toe the line with the corrupted individuals who are making this happen, typically of companies who stock is suppressed or there’s some type of financial gain being made. So you’re going to need an employment lawyer to navigate this process. And I have been giving you the kind of the backbone archetype of the architecture of the case. It’s really your written narrative about what you witnessed. And the more detailed that is, the employment lawyer is going to help you navigate the, especially the four elements, of course, that I read you earlier. But. hone the facts in such a way they become very, very believable. It’s not conclusory conjecture. It has to be based upon fact. You’re using a lot of people’s statements against other people’s interests, emails, texts, Slack. It’s really just one gigantic journal entry in a chronological order. The employment lawyer will help, and then the employment lawyer will help you obviously file the claim. But as you approach the agency’s lack of wherewithal to decide something in your favor, which is always the case, you’re going to have to file in federal court. And that’s when you have to have the employment lawyers, the litigator, like myself, to go into court in any jurisdiction in the country to do this. So that’s really the essence of how it’s now easier for whistleblowers under the Sarbanes-Oxley Act to file cases and be successful because the… The burden has basically shifted to the employer and there’s a tremendous amount of leverage for the employee to, you know, if you want to negotiate a severance settlement with the employer, it’s now even better to do that because of the change in the circumstance of the burden. The specific, the whole entire episode is about the contributing factor element that the employee has to prove versus the employer proving that they would have done it by clear convincing evidence we’ve gotten rid of this guy or this individual. So there you have it. But until next time, I will bring you another episode. Stay tuned and have a good day. Hey, it’s Mark. And thank you for listening to this episode of the Employee Survival Guide. If you’d like to be interviewed for our podcast and share your story about what you’re going through at work and do so anonymously, please send me an email at mcary at capclaw.com. And also, if you like this podcast episode and others like it, please leave us a review. It really does help others find this podcast. So leave a review on Apple or Spotify or wherever you listen to podcasts. Thank you very much. And glad to be of service to you.
