That an employee may have engaged in protected activity under The Sarbanes-Oxley Act (“SOX”) does not render their employer unable to address the employee’s subsequent misconduct or other inappropriate behavior. Employers retain the ability to take adverse employment action for legitimate reasons unrelated to an employee’s arguably protected activity under SOX. Mere protected activity, by itself, does not insulate an employee from the legitimate consequences of their misconduct that would not be tolerated from other employees.
For example, SOX protects whistle-blowers of publicly-traded companies against retaliation by their employers for providing information about potentially illegal conduct. But, as part of a prima facie case, SOX requires a showing, by a preponderance of the evidence, that the employee’s protected activity “was a contributing factor” in the employer’s unfavorable personnel action. See 29 C.F.R. § 1980.109(a). The passage of a significant amount of time or some legitimate intervening event between the protected activity and the adverse employment action are commonly recognized factors that refute an inference of causal connection between a termination, for example, and the purported protected activity.
While each case turns on its own set of facts, and in some instances how other employees have been similarly treated, employers can review with legal counsel their decisional risks to address any concerns over how to handle ongoing employee misconduct or inappropriate behavior. For example, long-past protected activities of a high-level executive in tandem with a “lengthy history of antagonism and intervening events” which caused the Board of Directors to view the executive as insubordinate, was found to be a lawful termination. Feldman v. Law Enforcement Assocs. Corp., 752 F.3d 339 (4th Cir. 2014). Otherwise, the “contributing factor” test of SOX “simply would be toothless.” (Id.) Leak v. Dominion Resources Services, Inc., ARB Nos. 07-043 and 07-051 ARB May 29, 2009) (affirming ALJ’s decision that employee’s “own behavior…short-circuited the meeting and precipitated his ultimate termination.”). An employee who engages in protected “whistle-blowing” activity under SOX can nonetheless be lawfully terminated for “swallow[ing] his whistle and decid[ing] not to cooperate with [his employer] in investigating his concerns.” Grove v. EMC Corp., 2006-SOX-99 (ALJ July 2, 2007). Having engaged in protected activity under SOX does not entitle an employee to “asylum” providing him with “absolute insulation from any adverse employment consequences.” A “whistle-blower” cannot unilaterally stop performing his job, or dictate the ground rules for his employer’s investigation of the issues he has raised, or refuse to cooperate if his terms are not met. Id.
While employers must be mindful of their legal obligations once an employee has engaged in protected activity under SOX, employers also have the right to expect their employees will not engage in improper conduct thereafter. An employee who “blows the whistle” is not shielded from the legitimate consequences an employer may take if the employee were to fail to cooperate in their employer’s investigation or engage in misconduct or other inappropriate behavior.
Please contact a Jackson Lewis attorney, including in our Corporate Governance and Internal Investigations practice group, with questions regarding advice and best practices in this expanding area.