USDOL/OALJ: Sarbanes-Oxley ("SOX") Whistleblower Digest: Adverse Action

Sarbanes-Oxley Act (SOX)
Whistleblower Digest
BURDEN OF PROOF AND PRODUCTION
ADVERSE ACTION
[Last Updated March 13, 2015]

Table of Contents

In General
Specific Conduct

IN GENERAL

After-Acquired Evidence

ADMINISTRATIVE LAW JUDGE DECISIONS

AFTER DISCOVERED EVIDENCE; EVIDENCE OF WRONGDOING BY COMPLAINANT MAY IMPACT ON REMEDY, BUT NOT ON QUESTION OF WRONGFUL RETALIATION

In Halloum v. Intel Corp. , 2003-SOX-7 (ALJ Mar. 4, 2004), the Respondent discovered while preparing for hearing that the Complainant made a misrepresentation in relation to moving expenses. The ALJ found that such could not have been a reason for the adverse employment action as it was only discovered later. The ALJ wrote: "An employer's after-acquired evidence of wrongdoing that could have resulted in discharge does not bar an employee from prevailing in a retaliation case. McKennon v. Nashville Publishing Co. , 513 U.S. 352, 358 (1995). The relocation misrepresentation would have limited the remedy had Complainant prevailed. Id. ; s ee also O'Day v. McDonnell Douglas Helicopter Co. , 79 F.3d 756, 760 (9th Cir. 1996)."

Complainant's Subjective Belief

FEDERAL COURT DECISIONS

ADVERSE ACTION; MERE THREAT OF ADVERSE ACTION; PLAINTIFF'S PERCEPTION

In Bozeman v. Per-Se Technologies, Inc. , 1:03-CV-3970 (N.D.Ga. Sept. 12, 2006), the Complainant had received his full entitlement to FMLA leave, and had been approved for return to his pre-leave position, but later decided not to return to work. His adverse action contention, therefore, hinged on an e-mail dating from the first day of the FMLA leave from one of the Defendant's officers instructing that the Plaintiff (as well as two other employees) be "riffed," and a claim that he was met with hostility at a meeting to discuss his return to work after the FMLA leave. Ultimately, the Plaintiff was not terminated. In finding a lack of adverse action, the court wrote:

[T]he mere threat of termination is not an adverse employment action. Van Der Meulen v. Brinker Int'l , 153 Fed.Appx. 649, 655 (11th Cir. 2005) (threat did not in fact cause any objective change in the plaintiff's employment where plaintiff worked for three weeks after the threatening statement); Pennington , 261 F.3d at 1267 (no adverse employment action where the employment decision is rescinded before the employee suffers a tangible harm); see also Israel v. Potter , 2004 WL 574668, at *4 (N.D. Ill. 2004) (No. 02-V-8006); Hitt v. Connell , 301 F.3d 240, 246 (5th Cir. 2002) ("neither the perception of a threat to one's job, nor fear of being fired, nor even the proposed notice of firing constitutes an actionable injury").

Slip op. at 170. The court found that the Plaintiff's constructive discharge claim failed as a matter of law because he had failed to allege an adverse employment action.

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE EMPLOYMENT ACTION; COMPLAINANT'S SUBJECTIVE BELIEF THAT HE WAS FIRED VERSUS OBJECTIVE VIEW OF SITUATION

In Harvey v. Safeway, Inc. , 2004-SOX-21 (ALJ Feb. 11, 2005), the ALJ found that although the Complainant may have had a understandable subjective belief that he had been fired when he received a phone message indicating that he should not come into work because he was not on the schedule, this interpretation of the phone message was not objectively reasonable. The record showed that the Complainant was anticipating being fired; however, the objective facts showed otherwise. Among other factors, the message only passed on information that the Complainant was not on the schedule. The Complainant remained on the schedule for several shifts for another two weeks after the phone message. Although his manager may have been unhappy with him, the Complainant had received assurances from the Respondent's corporate counsel that he would not be terminated for raising his concerns.

Evidence of Prior Acts

ADMINISTRATIVE LAW JUDGE DECISIONS

EVIDENCE OF PRIOR ACTS, ALTHOUGH NOT ACTIONABLE IF BEYOND LIMITATIONS PERIOD, ARE RELEVANT TO ISSUES OF CONTINUING RETALIATORY AND HOSTILE WORK ENVIRONMENT

In McClendon v. Hewlett Packard, Inc. , 2006-SOX-29 (ALJ Oct. 5, 2006), the Respondent moved to exclude evidence of any of the protected activities alleged in Complainant's earlier SOX complaint, which had been dismissed by both OSHA and the district court. Respondent argued that evidence of such activities, including allegations of co-employment, the falsification of financial records, and Respondent's alleged direction to destroy documents, were not causally related to the alleged adverse actions of Complainant's second complaint, taking place one year later, because there was no temporal proximity. In addition, Respondent argued that the listed protected activities were alleged in Complainant's prior complaint, which had been dismissed. Therefore, according to Respondent, it would be prejudicial to allow Complainant to introduce that evidence into his second SOX complaint. Complainant argued that the protected activities alleged in its first complaint were admissible because they belonged to a series of retaliatory events that included the events listed in Complainant's second complaint. The ALJ accepted Complainant's view of National Railroad v. Morgan , 536 U.S. 101, 113 (2002), in allowing Complainant to introduce evidence from its earlier (and dismissed) complaint as background evidence and as evidence of the alleged continuing retaliatory and hostile work environment. McClendon , slip op. at 4-5.

Former Employee

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE EMPLOYMENT ACTION; ALLEGED HARASSMENT OF FORMER EMPLOYEE MUST HAVE IMPACTED ON THE TERMS OR CONDITIONS OF EMPLOYMENT WITH RESPONDENT OR HAVE BEEN BLACKLISTING AFFECTING TERMS OR CONDITIONS WITH SUBSEQUENT EMPLOYER TO BE ACTIONABLE

In Harvey v. Home Depot U.S.A., Inc. , ARB Nos. 04-114 and 115, ALJ Nos. 2004-SOX-20 and 36 (ARB June 2, 2006), the Complainant had been fired. He subsequently filed grievances with a state bar association against a Home Depot attorney. In a response to the state bar, that attorney asserted that the Complainant's grievances were part of a campaign by the Complainant to harass Home Depot and its employees. The Complainant then filed a SOX whistleblower complaint with OSHA alleging that the attorney's response was in violation of the SOX. The ALJ dismissed the complaint because (1) the Complainant was not an employee of Home Depot at the time it allegedly harassed him, and the alleged harassment was not an adverse employment action that impacted on the terms and conditions of his employment with Home Depot, and (2) the Complainant had not presented any evidence of blacklisting resulting from the alleged harassment that adversely affected the terms or conditions of the Complainant's subsequent employment. The ALJ therefore concluded that the required element of a SOX complaint of an unfavorable personnel action was not met, and thus the complaint failed to state a cause of action under SOX. The ARB agreed with the ALJ's determination, and affirmed the dismissal of the complaint.

ADMINISTRATIVE LAW JUDGE DECISIONS

EMPLOYEE; ADVERSE ACTION; FILING OF ANTI-SLAPP SUIT

In Pittman v. Siemens AG , 2007-SOX-15 (ALJ July 26, 2007), the Complainant alleged that the Respondents engaged in adverse action when they filed an anti-SLAPP claim against the Complainant relating to a defamation suit in state court. The Complainant alleged that this suit was in retaliation for his filing of the SOX claim with OSHA. The ALJ, however, found that the Complainant had not been an employee of the Respondent for more than one and a half years prior to the filing of the anti-SLAPP motion. Since he was not an employee at time, and the anti-SLAPP suit was not blacklisting or interference with employment, the ALJ found that it was not adverse action under the whistleblower provision of the SOX.

EMPLOYEE; ADVERSE ACTION; SLANDEROUS RUMORS AGAINST FORMER EMPLOYEE

In Pittman v. Siemens AG , 2007-SOX-15 (ALJ July 26, 2007), the Complainant contended that a former co-worker had informed him that officers of the Respondent were spreading slanderous rumors about him. The ALJ noted that, except for blacklisting or interference with subsequent employment, the SOX only protects an employee from retaliation for his protected activity while the complainant is an employee of the respondent. Since the alleged slanders occured two years after the Complainant's employment with the Respondent had been terminated, he was not an employee at the time of the alleged adverse action and the claim was not covered under SOX.

ADVERSE EMPLOYMENT ACTION; FORMER EMPLOYEE

In Harvey v., The Home Depot, Inc. , 2004-SOX-36 (ALJ May 28, 2004), the ALJ found that the Complainant had failed to state a claim upon which relief may be granted where the complaint alleged that the Respondent violated the whistleblower provision of the SOX because the Respondent had stated that the Complainant was harassing the Respondent's Board of Directors and Executives. Specifically, the Complainant had filed a professional responsibility complaint against the Respondent's attorney, and that attorney's representative had filed a response to the state committee stating that the Complainant's grievances were "part of an on-going campaign by Mr. Harvey to harass Home Dept and its employees." The Complainant was no longer employed by the Respondent when this statement was made.

The ALJ found that "with the exception of blacklisting or other active interference with subsequent employment, the SOX employee protection provisions essentially shelter an employee from employment discrimination in retaliation for his or her protected activities, while the complainant is an employee of the respondent." Slip op. at 4-5 (footnote omitted). Thus, the harassment comment was not an adverse personnel or employment action. Nor was there any evidence to support a finding that the harassment comment adversely affected the terms or conditions of any subsequent employment by the Complainant.

Reasonable Employee/Materially Adverse Standard ( Burlington Northern )

FEDERAL COURT DECISIONS

ADVERSE ACTION UNDER SOX INCLUDES ALL UNFAVORABLE EMPLOYMENT ACTIONS THAT ARE MORE THAN TRIVIAL

In Guitron v. Wells Fargo Bank, N.A. , No. C 10-3461 CW, 2012 WL 2708517 (N.D.Cal. July 6, 2012), two bankers (Plaintiff Guitron and Plaintiff Klosek) alleged that they suffered retaliation after they reported to their employer that two of their coworkers were engaging in unlawful and unethical business practices related to customer account management.

Plaintiff Guitron complained to her supervisor that her coworker had allegedly opened or closed accounts without the customer's permission, and that other bankers were opening accounts with forms of identification that were not acceptable under company policy. As a result, Plaintiff Guitron alleged that her supervisor stopped referring business to her and harassed her when she requested time off. When her coworkers were not investigated, she contacted the regional Vice President, the company's human resources office, and the company's ethics hotline to report the conduct. Plaintiff Guitron's struggled to meet her sales requirements, and her relationship with her supervisor deteriorated, until her supervisor eventually dismissed her for insubordination.

Plaintiff Klosek worked under the same supervisor as Plaintiff Guitron, and also complained about unethical conduct, including opening and closing accounts without customer permission, forcing sales, and "shoving products down customers' throats." Guitron at *7. She alleged that this behavior violated both ethical rules and consumer laws governing fraudulent conduct. Plaintiff Klosek received poor performance evaluations and a verbal warning for failure to meet her sales goals, and she eventually went on extended medical leave due to work related stress. After she was terminated, she filed a joint SOX complaint with Plaintiff Guitron, alleging unlawful retaliation for reporting bank and mail fraud.

Relying principally on the Fifth Circuit's decision in Allen v. Admin. Review Bd. , 514 F.3d 468, 476 n. 2 (5th Cir.2008), which applied the Title VII Burlington Northern standard for adverse action to a SOX complaint, the defendants argued that Plaintiff Guitron failed to offer sufficient evidence showing that she suffered a materially adverse employment action. The court first corrected the defendants, explaining that the ARB's decisions in Williams v. America Airlines, Inc. , ARB Case No. 09-018 (2010) and Menendez v. Halliburton, Inc. , 2011 DOL Ad. Rev. Bd. LEXIS 83 set the standard for adverse action in SOX cases, and "adverse actions" refers to "unfavorable employment actions that are more than trivial, either as a single event or in combination with other deliberate employer actions alleged." Guitron at *16. In this case, Plaintiff Guitron has offered sufficient evidence that she suffered an unfavorable employment action that is more than trivial, including a suspension and poor performance reviews.

However, the court nonetheless granted summary judgment for the employer on Plaintiff Guitron's SOX complaint because the employer had provided clear and convincing evidence that it would have terminated her employment even absent the protected activity. Specifically, the defendants demonstrated that they issued Plaintiff Guitron numerous warnings for failure to meet her quarterly sales goals, that they dismissed her (i.e. placed her on administrative leave) for clear insubordination, and that they eventually terminated her because she refused to return to work from administrative leave.

"UNFAVORABLE PERSONNEL ACTION" IS GOVERNED BY BURLINGTON NORTHERN DEFINITION

In Allen v. Administrative Review Bd., USDOL , No. 06-60849, ___ F.3d ___, 2008 WL 171588 (5th Cir. Jan. 22, 2008) (case below ARB No. ARB No. 06-081, ALJ Nos. 2004-SOX-60 to 62), the Fifth Circuit Court of Appeals held that the Burlington Northern & Santa Fe Railway Co. v. White , 126 S. Ct. 2405 (2006), definition of "unfavorable personnel action" applies to SOX whistleblower claims -- i.e. , a plaintiff must show that a reasonable employee would have found the challenged action materially adverse, which in this context means it well might have dissuaded a reasonable worker from engaging in the protected activity.

"ADVERSE EMPLOYMENT ACTION" IS GOVERNED BY BURLINGTON NORTHERN DEFINITION

In Miles v. Wal-Mart Stores, Inc. , No. 5:06-CV-05162, slip op. at n.4 and surrounding text (W.D.Ark. Jan. 25, 2008), the court agreed with the ARB's conclusion that the Burlington Northern & Santa Fe Railway Co. v. White , 126 S. Ct. 2405 (2006), standard for demonstrating an adverse employment action is appropriate in the adjudication of SOX whistleblower complaints, even though the standard was announced in connection with retaliation claims under Title VII. Specifically, "[i]n order to show an adverse employment action, Plaintiff must demonstrate 'employer actions that would have been materially adverse to a reasonable employee . . .' and 'harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination.'" Slip op. at 8.

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE ACTION; ARB FINDS THAT THE BURLINGTON NORTHERN "MATERIALLY ADVERSE" STANDARD APPLIES TO THE STAA AND ALL OF THE EMPLOYMENT PROTECTION STATUTES ADJUDICATED BY THE DEPARTMENT OF LABOR

In Melton v. Yellow Transportation, Inc. , ARB No. 06-052, ALJ No. 2005-STA-2 (ARB Sept. 30, 2008), the ARB addressed the Complainant's request on appeal to abandon the "tangible employment consequence" test, and to adopt instead the deterrence standard of Burlington Northern & Santa Fe Ry. Co. v. White , 548 U.S. 53 (2006). In Melton , the Complainant had been issued a warning letter in which the Respondent admonished the Complainant not to use fatigue as a subterfuge to avoid work. Both the Respondent and union witnesses testified that a single warning letter was corrective action, and although it was a pre-condition to most discipline, it was not itself discipline. The letter had no effect on hours, work assignments, pay, opportunities for advancement, or retirement benefits. All members of the Board agreed that under ARB precedent, such a warning letter would not be considered adverse employment action. The panel, however, spilt on the issue of whether the Burlington Northern "materially adverse" standard should now apply to an STAA whistleblower case (as well as all of the other anti-retaliation laws adjudicated before the DOL). A two-member majority found that it does. The majority wrote:

Burlington Northern held that for the employer action to be deemed "materially adverse," it must be such that it "could well dissuade a reasonable worker from making or supporting a charge of discrimination." For purposes of the retaliation statutes that the Labor Department adjudicates, the test is whether the employer action could dissuade a reasonable worker from engaging in protected activity. According to the Court, a "reasonable worker" is a "reasonable person in the plaintiff's position."

USDOL/OALJ Reporter at 19-20 (footnotes omitted). The majority stated that "the purpose of the employee protections that the Labor Department administers is to encourage employees to freely report noncompliance with safety, environmental, or securities regulations and thus protect the public. Therefore, we think that testing the employer's action by whether it would deter a similarly situated person from reporting a safety or environmental or securities concern effectively promotes the purpose of the anti-retaliation statutes." Id. at 20. Moreover, it stated that both ARB and federal case law demonstrated that the terms "tangible consequences" and "materially adverse" are "used interchangeably to describe the level of severity an employer's action must reach before it is actionable adverse employment action." Id . The majority summarized:

The Board has consistently recognized that not every action taken by an employer that renders an employee unhappy constitutes an adverse employment action. The employee protections that the Labor Department administers are not "general civility codes," nor do they make ordinary tribulations of the workplace actionable. Actions that cause the employee only temporary unhappiness do not have an adverse effect on compensation, terms, conditions, or privileges of employment. Therefore, the fact that the Burlington Northern test is phrased in terms of "materially adverse" rather than "tangible consequence," or "significant change," or "materially disadvantaged," or the like, is of no consequence. Applying this test would not deviate from past precedent. Like the Burlington Northern Court, our task has always been, and will continue to be, to separate harmful employer action from petty, minor workplace tribulations.

Id. at 23 (footnotes omitted). Applying the standard, the majority held that the warning letter in the instant case "was not materially adverse because the record demonstrates that it did not affect his pay, terms, or privileges of employment, did not lead to discipline, and was removed from his personnel file without consequences. Therefore, under the particular facts and circumstances presented here, the warning letter at issue would not dissuade a reasonable employee from refusing to drive because of fatigue." Id. at 24.

[ Editor's Note: Hirst is an AIR21 whistleblower case; however, since AIR21 burdens of proof and production apply to SOX whistleblower cases, the ARB's adoption of Burlington Northern may be applicable to SOX cases. ]

ADVERSE ACTION; ADOPTION OF BURLINGTON NORTHERN "MATERIALLY ADVERSE" STANDARD; EMPLOYER'S IMMEDIATE RESCINDING OF DISCHARGE

In Hirst v. Southeast Airlines, Inc. , ARB Nos. 04-116, 04-160, ALJ No. 2003-AIR-47 (ARB Jan. 31, 2007), PDF | HTM the ARB found that it was bound to accept the ALJ's finding that the Complainant had been discharged because it was supported by substantial evidence.

Applying a recent Supreme Court Title VII decision to to STAA whistleblower provision, however, the ARB held that the Complainant had not established that he suffered adverse employment action. See Burlington Northern & Santa Fe Ry. Co. v. White , --- U.S. ----, 126 S. Ct. 2405 (June 22, 2006). The ARB cited the Supreme Court's ruling that a Title VII plaintiff must show that a reasonable employee or job applicant would find the employer's action "materially adverse," i.e. , "the employer's actions must be harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination." USDOL/OALJ Reporter at 10-11, quoting 126 S. Ct. at 2409.

In Hirst , the ARB found that a reasonable employee would have concluded that though the Respondent's Director of Operations acted hastily and retaliated against the Complainant for refusing to pilot a flight, the Respondent's officials, including the Director of Operations:

quickly recognized this mistake, promptly corrected it, immediately informed Hirst that he was still employed, confirmed that fact in writing, and made sure that Hirst suffered no economic loss. A reasonable worker would see that SEAL [Southeast Airlines] corrected its mistake within two days and that Hirst, at most, suffered only temporary unhappiness. In the wake of Malone's decision to discharge Hirst, SEAL's actions certainly sent a message that management will respect and protect employees who are concerned with safety. That, of course, is the right message. Therefore, based solely on these particular facts, we find that a reasonable SEAL employee would not be afraid to make management aware of safety concerns, or, in White terminology, would not be "dissuaded" from engaging in protected activity.

USDOL/OALJ Reporter at 12.

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; APPLICATION OF BURLINGTON NORTHERN ; TRANSFERS

In McClendon v. Hewlett Packard, Inc. , 2006-SOX-29 (ALJ Oct. 5, 2006), the ALJ relied on the U.S. Supreme Court's ruling in a Title VII retaliation action that, to prove an adverse action, a plaintiff "must show that a reasonable employee would have found the challenged action materially adverse, 'which in this context means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.'" McClendon , slip op. at 76, citing to Burlington Northern & Santa Fe Railway Co. v. White , No. 05-259, 2006 WL 1698953 (U.S. 2006).

The ALJ ruled that Complainant's transfer to a different section and a change in his reporting structure was not an adverse action. Complainant was one of thirty people transferred to a new section as a result of a corporate restructuring. See McClendon , slip op. at 76. Based on past history, Complainant explained to management that he was reluctant to be supervised by the head of his newly assigned section. McClendon, slip op. at 76-77. He was assured that he would be reporting to a different project manager. Id. at 77. Complainant argued that this new arrangement was an adverse action since he was now reporting to a lower-level project manager and because he was excluded from section meetings and the section email list. Id. at 77. The ALJ ruled that because Complainant's transfer did not change his pay or interfere with his ability to work, and because Complainant was alerted of any news or events by his project manager, "a reasonable employee would not be dissuaded from whistleblowing based on the transfer and change in reporting structure." Id. at 77-78.

In contrast, the ALJ ruled that Complainant's transfer to an entirely new position was an adverse act. McClendon , slip op. at 80. The ALJ noted that Complainant had previously discussed with management a transfer to another department, however it was in the context of doing the same type of work he had already been enjoying and succeeding in. Id . at 79-80. Complainant had only one day to decide whether to accept the new position and faced placement on the lay-off list if he declined. Id . at 80. In addition, Complainant's workload decreased significantly, and the scope of Complainant's new position "varied unfavorably from the scope of the position when past employees filed it." Id. at 80. Thus, the ALJ ruled that the transfer of Complainant to the new position would dissuade a reasonable employee from engaging in protected activity, and it therefore constituted an adverse act under SOX. Id. at 79-80.

ADVERSE EMPLOYMENT ACTION; ACTION IS ADVERSE UNDER "WHISTLEBLOWER" LAWS IF THE ACTION IS LIKELY TO DETER PROTECTED DISCLOSURES

In his recommended decision in Halloum v. Intel Corp. , 2003-SOX-7 (ALJ Mar. 4, 2004),the ALJ concluded that

An employment action is unfavorable if it is reasonably likely to deter employees from making protected disclosures. A complainant need not prove termination or suspension from the job, or a reduction in salary or responsibilities. Ray v. Henderson , 217 F.3d 1234, 1243 (9th Cir. 2000). 18 / See also Daniel v. TIMCO Aviation Servs., Inc , 2002-AIR-26 (ALJ June 11, 2003)

_________

18 /Title VII case law has traditionally guided the adjudication of whistle blower cases, including the determination of whether an employer discriminated against a protected employee. See Daniel v. TIMCO Aviation Servs., Inc , 2002-AIR-26 (ALJ June 11, 2003). Whistle blower statutes are meant to encourage workers to disclose illegal and questionable activities, so their tests for unfavorable employment action encompass more than the adverse economic actions Title VII plaintiffs must prove; any action that would reasonably discourage a worker from making disclosures qualifies here. Daniel , slip op. at 15.

In Halloum , the ALJ found that a Corrective Action Plan (CAP) imposed prior to the Complainant's protected activity was not unfavorable employment action under the SOX regulations, and that requiring him to meet the CAP goals later was also not unfavorable employment action. However, the ALJ also found that a later modification to the CAP that set up the Complainant for failure by assigning him unattainable tasks was an unfavorable employment action.

[Editor's note: Compare White v. Burlington Northern & Santa Fe Railway Co. , 2004 Fed. App. 0101P (6th Cir. Apr. 14, 2004) (rejecting EEOC interpretation that "adverse employment action" in the context of a Title VII retaliation claim means "any adverse treatment that is based on a retaliatory motive and is reasonably likely to deter a charging party or others from engaging in protected activity.")]

Summary Decision

ADMINISTRATIVE REVIEW BOARD DECISIONS

SUMMARY DECISION; FAILURE OF COMPLAINANT TO IDENTIFY THE ADVERSE ACTION THAT FORMED THE BASIS OF THE COMPLAINT

Noting that "[a]n 'adverse action' under the SOX Section 806 whistleblower provision refers to any unfavorable employment action that is more than trivial, either as a single event or in combination with other deliberate employer actions," the Board in Lewis v. Walt Disney World , ARB No. 10-106, ALJ No. 2010-SOX-27 (ARB Jan. 27, 2012), affirmed the summary dismissal of the Complainant's SOX complaint on the ground that the Complainant failed to identify the adverse action that formed the basis of his claim. The ARB stated that proving an adverse action is an essential element of a SOX whistleblower claim. In Lewis , the record contained a vague reference to the fact that the Complainant "stopped working" sometime in 2007, but it was unclear whether he resigned or whether he was discharged or even constructively discharged. The ARB stated that it was the Complainant's burden to assert and ultimately prove the adverse action taken by the Respondent.

Tangible Job Consequences

FEDERAL COURT DECISIONS

DISCLOSURE OF EMPLOYEE'S IDENTITY AS A MATERIALLY ADVERSE EMPLOYMENT ACTION UNDER BURLINGTON NORTHERN

In Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Mar. 11, 2015) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5), the Fifth Circuit denied rehearing en banc of Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) ( Revised Opinion - Dec. 29, 2014). Three Circuit Judges filed a dissent stating that the panel's decision concerning whether the disclosure of an employee's identity may be a materially adverse employment action under Burlington Northern was ad hoc, and should be reheard en banc "to provide some contours to the concept of an adverse employment action so that we mete out employee rights on the same standard to all."

ADVERSE EMPLOYMENT ACTION NOT SHOWN BY ACTIONS THAT MERELY INCONVENIENCED THE PLAINTIFF, DID NOT CONSITUTE A SIGNFICIANT DIMINUTION OF RESPONSIBILITIES, OR HAD NOT ELMINATED A ROUTINE PART OF THE PLAINTIFF'S EMPLOYMENT

In Fraser v. Fiduciary Trust Co., Int'l , No. 1:04-cv-06958 (S.D.N.Y. Aug. 25, 2009) (case below 2003-SOX-28), the court found that three acts identified by the Plaintiff as retaliatory were not adverse employment actions. First, moving the Plaintiff's desk close to his supervisor's desk was no more than a mere inconvenience. Second, relieving the Plaintiff of responsibility for a client newsletter might constitute an alteration of job responsibilities, but it did not represent a significant diminution of those responsibilities. Third, curtailment of invitations to certain committee meetings was not adverse because the invitations had only been extended there was extra room available, and the Plaintiff's attendance at those meetings was not a routine part of his employment in the first place.

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE ACTION; REJECTION OF "TANGIBLE CONSEQUENCES" STANDARD IN SOX SECTION 806 CASES; BURLINGTON STANDARD IS STARTING POINT FOR ANALYSIS - NAMELY, DID THE RESPONDENT ENGAGE IN ACTIVITY THAT WOULD DISSUADE A REASONABLE EMPLOYEE FROM ENGAGING IN PROTECTED ACTIVITY

Section 806's intended protection is not limited to economic or employment-related actions

In Menendez v. Halliburton, Inc. , ARB Nos. 09-002, -003, ALJ No. 2007-SOX-5 (ARB Sept. 13, 2011), considered whether the adverse action standard from Burlington Northern & Santa Fe Railway Co. v. White , 548 U.S. 53 (2006), controls in a SOX Section 806 whistleblower complaint. The Board first observed that the plain language of Section 806 proscribes non-tangible activity; that such language was to be construed broadly, as had been other whistleblower laws; and that it was not necessary to turn to the definition of adverse action articulated in Title VII cases like Burlington . However, because the parties in the case sub judice, and the Board itself in other cases, had argued the relevance of the Burlington adverse action standard, the ARB went on to address the question. The ARB noted that Section 806's statutory language is on its face more expansive that either Section 703 or Section 704 of Title VII, and unlike Title VII, explicitly proscribes non-tangible activity. The Board wrote:

    Considering these differences in statutory language, in Williams [ v. American Airlines, Inc . ARB No. 09-018, ALJ No. 2007-AIR-004, slip op. at. 12-15 (ARB Dec. 29, 2010)], we held that the intended protection of AIR 21 extends beyond any limitations in Title VII and can extend beyond tangibility and ultimate employment actions. Because of its similarity to the adverse action language construed in Williams and for reasons explained below, we adopt the Williams standard of actionable adverse action as likewise applicable to Section 806 cases. Under this standard, "the term 'adverse actions' refers to unfavorable employment actions that are more than trivial, either as a single event or in combination with other deliberate employer actions alleged."

USDOL/OALJ Reporter at 17 (footnote omitted). The Board, however, found that the Burlington standard "serves as a helpful guide for the analysis of adverse acts under SOX." Id . The Board observed in that in Melton v. Yellow Transp., Inc. , ARB No. 06-052, ALJ No. 2005-STA-2, slip op. at 18 (ARB Sept. 30, 2008), it had recognized that there was a two-fold holding in Burlington addressing both the degree and scope of actionable adverse action, and that a majority of the Board in Melton had

explained that "terms and conditions" language was relevant only to the scope of coverage but not the degree of actionable harm. The Melton majority reasoned that, while the scope of harm must be employment-related, the degree of actionable harm for both the Title VII anti-retaliation provision and whistleblower provision were the same - that which would deter a reasonable employee from engaging in protected activity. Broad protection effectively serves similar purposes for both provisions by effectively deterring the myriad forms that retaliation may take and frees employees to engage in protected activity.

    Today, we pick up where the Melton majority left off. Rather than a limitation on what is to be considered adverse action under Section 806, we are of the opinion that "terms and conditions of employment" are not significant limiting words and should be construed broadly within the remedial context of Section 806. We find the Court's more extensive explanation in Meritor Savings Bank, FSB v. Vinson , to be more convincing:

First, the language of Title VII is not limited to "economic" or "tangible" discrimination. The phrase "terms, conditions, or privileges of employment" evinces a congressional intent "'to strike at the entire spectrum of disparate treatment of men and women'" in employment.

    Under Section 806, the language "in the terms and conditions of employment" does not limit Section 806's intended protection to economic or employment-related actions.

USDOL/OALJ Reporter at 18 (footnotes omitted).

Misapplication over past 10 years by the ARB of Title VII "tangible" consequences standard to whistleblower cases; tangible consequences goes to remedies rather than whether there has been a violation; adverse actions must be reviewed both separately and in the aggregate

The ARB noted that the ALJ's decision had reflected confusion about the proper standard to apply, which might be a reflection of the ARB's confounding precedent in the area, which the ARB attributed in part to incautious application of Title VII precedent to whistleblower cases. The ARB explained that prior to 2000, whistleblower law had consistently prohibited an expansive array of employment actions not necessarily limited to "tangible" consequences, monetary loss or ultimate employment actions; but that over the last decade the broad coverage had been replaced by adverse action standards imported from Title VII cases that had the effect of narrowing the scope of actionable activity. The ARB found that the Title VII decision in Burlington , "reinstated a broader definition of the term 'adverse action' - namely, activity that would dissuade a reasonable employee from engaging in protected activity - that is consistent with the expansive construction required of whistleblower statutes. Accordingly, Burlington may provide a useful starting place for reviewing Section 806 adverse action allegations; Burlington 's deterrence standard prohibiting actions that would deter a reasonable employee from engaging in protected activity would be actionable under Section 806 as well." USDOL/OALJ Reporter at 20.

The ARB found therefore that the ALJ had erred in applying the standard of "tangible job consequences" to the adverse actions alleged in the case on appeal. The ALJ's application of the standard also failed to recognize that the body of the decisional law holds that the absence of tangible injury goes to the remedy rather than whether the employer violated the law. The ARB also concluded that the ALJ had failed to consider the adverse actions in the aggregate, as well as separately - stating that "minor acts of retaliation can be sufficiently substantial when viewed together to be actionable." USDOL/OALJ Reporter at 21 (footnote omitted).

[ Editor's note : In Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5), the Fifth Circuit reaffirmed its decision in Allen v. Admin. Review Bd. , 514 F.3d 468, 476 n.2 (5th Cir. 2008), holding that the Title VII material-adversity standard enunciated in Burlington Northern & Santa Fe Railway Co. v. White , 548 U.S. 53 at 67-68 (2006), applied to SOX's antiretaliation provision. The court found that the ARB essentially applied this standard in Menendez , and that found that portions of the ARB decision suggesting a lesser standard was dicta and indicated that its decision affirming the ARB should not be construed as implying its agreement with that dicta. The court also declined to address language in ARB's decision indicating that under SOX's antiretaliation provision, company conduct is actionable regardless of whether it is "employment-related" or not.] [Editor's note: On March 11, 2015, the Fifth Circuit denied rehearing en banc. Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Mar. 11, 2015). Three Circuit Judges filed a dissent stating that the panel's decision concerning whether the disclosure of an employee's identity may be a materially adverse employment action under Burlington Northern was ad hoc, and should be reheard en banc "to provide some contours to the concept of an adverse employment action so that we mete out employee rights on the same standard to all."]

ADVERSE ACTION; "TANGIBLE JOB CONSEQUENCES" AND "DETRIMENTAL EFFECT" TESTS

In Allen v. Stewart Enterprises, Inc. , ARB No. 06-081, ALJ Nos. 2004-SOX-60 to 62 (ARB July 27, 2006), the ARB observed that the ALJ applied both a "tangible job consequences" and a "detrimental effect" test in determining whether the Respondent engaged in adverse employment action against the Complainants. The Board explained that:

    A "tangible job consequence" is one that "constitutes a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing significant change in benefits." Under the "detrimental effect" test, an employment action is adverse if it is reasonably likely to deter employees from making protected disclosures.

Slip op. at 14. The ARB affirmed the ALJ's finding that the Respondent's use of monthly "contract error reports" was not adverse action where there were no tangible job consequences for the Complainants for charged errors, and the reports would not have deterred others from engaging in protected activity. The ARB also affirmed the ALJ's finding that a workspace relocation was not adverse action where the new conditions did not affect the Complainants' ability to perform their work and did not significantly change their employment status, and where the Complainants presented no evidence that the new locations would deter other employees from making protected disclosures.

In regard to the Complainants allegations of a hostile work environment based on "stonewalling" and "friction," the ARB observed that the evidence did not show that such circumstances were pervasive, humiliating or interfered with the Complainants' work performance. The Board wrote: "These ordinary tribulations of the workplace do not rise to the level of adverse actions because they do not result in tangible job consequences or deter employees from engaging in protected activity." Slip op. at 16.

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE EMPLOYMENT ACTION; TANGIBLE JOB CONSEQUENCE ANALYSIS VIS-A-VIS TITLE VII INTERPRETATIVE LAW IN CIRCUIT IN WHICH CASE AROSE; UNDER AN EXPANSIVE DEFINITION, PLACEMENT ON A LAY-OFF LIST IS ADVERSE ACTION, BUT NON-SEVERE AND NON-PERVASIVE ACTIONS ARE NOT

In Hendrix v. American Airlines, Inc. , 2004-AIR-10, 2004-SOX-23 (ALJ Dec. 9, 2003), the ALJ thoroughly analyzed discordant administrative decisions relative to the meaning of "adverse action" under various whistleblower laws, and specifically the concept of tangible job consequence. She concluded that, although Title VII decisions are not binding precedent for purposes of a whistleblower claim, they provide helpful guidance. The ALJ also concluded that she should look to the law of circuit in which the claim arises. Because the instant case alleging violations of both the AIR21 and SOX whistleblower laws arose in the Tenth Circuit, she applied the expansive definition of adverse action found in Hillig v. Rumsfeld , 381 F.3d 1028 (10th Cir. 2004), in which the court held that the fact that unlawful personnel action turned out to be inconsequential goes to damages, not liability, although the standard does not encompass mere inconvenience or alteration of job responsibilities. In a footnote, the ALJ observed that the Sarbanes Oxley Act contains language, unlike other whistleblower laws, explicitly prohibiting threats and harassment -- acts which are not necessarily tangible and not ultimate employment actions.

Applying this standard, the ALJ found that the Complainant's placement on a lay-off list constitutes an adverse action, even though the Complainant suffered no tangible consequence as his name was removed before the lay-offs took effect. [Later in the decision, however, the ALJ found that there was no connection between protected activity and the placement on the lay-off list].

The Complainant also raised a hostile work environment claim. The ALJ initially parsed out which portions of the claim were timely raised. She found that claims of verbal abuse, assignment to a second shift, and denial of access to computer resources were timely raised. The ALJ, however, found these actions were not so severe and pervasive that they altered the terms of the Complainant's employment -- they were the kinds of inconvenience an employee should expect to endure in the normal workplace.

SPECIFIC CONDUCT

Benefits

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE ACTION; WHERE PENSION BENEFITS HAD BEEN CALCULATED CONSISTENT WITH PENSION PLAN CRITERIA, SOX COMPLAINT WAS DISMISSED FOR FAILURE TO ESTABLISH ADVERSE ACTION ELEMENT

In Levi v. Anheuser Busch Inbev , ARB No. 13-047, ALJ No. 2012-SOX-39 (ARB July 24, 2014), the Complainant filed a SOX complaint alleging that a pension plan determination that set the termination date for calculation of his pension on the final day he was actually paid, rather than the later effective date of his termination, constituted retaliation for his earlier whistleblowing activity against the Respondent. The ALJ dismissed the complaint for two reasons: (1) that collateral estoppel barred the Complainant from re-litigating whether he engaged in protected activity, and (2) the Complainant failed to offer evidence that he suffered an adverse personnel action when receiving his pension determination. The ARB found that the ALJ correctly determined that the complaint was precluded under collateral estoppel to the extent that the complaint was based on protected activity that occurred prior to the Complainant's discharge, an issue that had previously been litigated between the parties. The ARB, however, found that the Complainant had also asserted that his post-discharge filing with OSHA of whistleblower complaints constituted protected activity. The ARB found that this allegation of protected activity was not barred by collateral estoppel.

The ARB, however, found that the uncontroverted evidence of record showed that the effective date of the Complainant's discharge did not control the amount of the pension benefits; rather, the pension plan calculated benefits based on days actually paid as an employee. The ARB affirmed the ALJ's finding that the Complainant had not established an adverse action.

One member of the Board concurred. She concluded that the substantive protected activity alleged by the Complainant in his complaint and his amended complaint stemmed from pre-discharge activity, and therefore collateral estoppel and res judicata clearly applied to bar the instant complaint. This member of the Board would not have reached the adverse action issue.

Blacklisting

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; BLACKLISTING; MERE EVIDENCE THAT COMPLAINANT WAS NOT HIRED INSUFFICIENT TO ESTABLISH CAUSE OF ACTION

In McIntyre v. Merrill, Lynch, Pierce, Fenner & Smith, Inc. , 2003-SOX-23 (ALJ Jan. 16, 2004), the ALJ found that the continuing violation theory could not be invoked to establish a whistleblower complaint based on a blacklisting theory, where the Complainant's only evidence was that he had applied for work with several entities and not hired. In McIntyre , the Complainant's discharge had occurred prior to the effective date of the SOX whistleblower provision, and he was asserting the blacklisting claim in order to establish a claim that would not be barred as an impermissible retroactive application of the Sarbanes-Oxley Act. The ALJ observed that the Complainant, a stock broker, had introduced no evidence to tie any of the applications or subsequent refusals to hire with any protected activity or Complainant's U-5. A U-5 is a National Association of Securities Dealers' "Uniform Termination Notice." Complainant alleged that the U-5 listed false reasons for his discharge.

Breach of Confidentiality

FEDERAL COURT DECISIONS

DISCLOSURE OF EMPLOYEE'S IDENTITY AS A MATERIALLY ADVERSE EMPLOYMENT ACTION UNDER BURLINGTON NORTHERN

In Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Mar. 11, 2015) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5), the Fifth Circuit denied rehearing en banc of Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) ( Revised Opinion - Dec. 29, 2014). Three Circuit Judges filed a dissent stating that the panel's decision concerning whether the disclosure of an employee's identity may be a materially adverse employment action under Burlington Northern was ad hoc, and should be reheard en banc "to provide some contours to the concept of an adverse employment action so that we mete out employee rights on the same standard to all."

ADVERSE ACTION; REVEALING IDENTITY OF WHISTLEBLOWER WHO FILED CONFIDENTIAL COMPLAINT

In Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5), the complainant (Menendez), an employee of Halliburton's finance and accounting department, used the company's confidential internal procedures to raise a concern about whether certain revenue recognition practices conformed to generally accepted accounting practices. The complainant also filed a complaint with the SEC. The SEC contacted Halliburton and instructed it to retain certain documents during the SEC's investigation. Halliburton inferred from the SEC notice that the complainant had filed a complaint with the SEC. Halliburton sent an email to the complainant's colleagues that instructed them to start retaining certain documents because "the SEC has opened an inquiry into the allegations of Mr. Menendez." The complainant's colleagues, whom he had essentially accused of fraud, then generally refused to work and associate with him. The 5th Circuit affirmed the ARB's determination that Halliburton's disclosure of the complainant's identity as the SEC whistleblower, resulting in the complainant's workplace ostracism, constituted illegal retaliation under § 806 of the Sarbanes-Oxley Act ("SOX"), 18 U.S.C. § 1514A(a).

Revealing identity of whistleblower who had filed confidential complaint as adverse action

On appeal, Halliburton argued that the ARB improperly determined that the complainant suffered an "adverse action" when the company disclosed his identity as the whistleblower to his colleagues,

The court initially observed that in Allen v. Admin. Review Bd. , 514 F.3d 468, 476 n.2 (5th Cir. 2008), it concluded that the Title VII material-adversity standard enunciated in Burlington Northern & Santa Fe Railway Co. v. White , 548 U.S. 53 at 67-68 (2006), applied to SOX's antiretaliation provision. The court noted that "under Allen , a SOX antiretaliation claim requires an 'adverse action' that meets Burlington 's definition of material adversity, i.e. , an action harmful enough that it well might have dissuaded a reasonable worker from engaging in statutorily protected whistleblowing." Halliburton, supra , slip op. at 9-10. In the instant case, the ARB "found that Halliburton's disclosure to Menendez's colleagues of his identity as the whistleblower who had reported them to the authorities, thus invoking an official investigation, constituted such an 'adverse action.'" Id . at 10.

Halliburton noted that the ALJ had reached the opposite conclusion and argued that the ARB had therefore disregarded the ALJ's factual findings. The court rejected this argument, noting that under the Burlington standard the question whether a company's conduct well might dissuade a "reasonable" worker from engaging in protected conduct is a legal question, that the ARB had adopted the ALJ's findings of fact but only came to a different conclusion as to the legal import of those facts. The court held that the ARB did not exceed its authority merely because it came to a different legal conclusion than did the ALJ.

In regard to the ARB's legal conclusion, the court found no reversible error. The court wrote:

The undesirable consequences, from a whistleblower's perspective, of the whistleblower's supervisor telling the whistleblower's colleagues that he reported them to authorities for what are allegedly fraudulent practices, thus resulting in an official investigation, are obvious. It is inevitable that such a disclosure would result in ostracism, and, unsurprisingly, that is exactly what happened to Menendez following the disclosure. Furthermore, when it is the boss that identifies one of his employees as the whistleblower who has brought an official investigation upon the department, as happened here, the boss could be read as sending a warning, granting his implied imprimatur on differential treatment of the employee, or otherwise expressing a sort of discontent from on high. Moreover, in Menendez's workplace, collaboration with colleagues was valued. Menendez's supervisor scolded him for not collaborating with his colleagues enough and told him to be more of a "team player." In an environment where insufficient collaboration constitutes deficient performance, the employer's disclosure of the whistleblower's identity and thus targeted creation of an environment in which the whistleblower is ostracized is not merely a matter of social concern, but is, in effect, a potential deprivation of opportunities for future advancement.

We, like other courts that have addressed similar circumstances, agree with the Review Board's conclusion that, in a workplace environment such as Menendez's where collaboration is an important part of the job, the employer's targeted disclosure to the whistleblower's colleagues that the whistleblower had reported them to the authorities for alleged wrongdoing and has caused them to become the subject of an official investigation, thus creating an environment of ostracism, well might dissuade a reasonable employee from whistleblowing.

Halliburton, supra , slip op. at 13-14 (citations omitted).

In a footnote, the court noted Halliburton's contention that the ARB had applied some sort of lesser standard than the Burlington 's material-adversity standard. The court stated:.

For example, parts of the opinion suggest that the Burlington standard does not "control" because it is not "broad" enough, but it is "compelling" and a "helpful guide." We agree with Halliburton that this language is troubling, but we conclude that it is dicta.

Id . at 10, n.5. See also id. at 23 and n.12 (declining to address language in ARB's decision indicating that under SOX's antiretaliation provision, company conduct is actionable regardless of whether it is "employment-related" or not).

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE ACTION; BREACH OF CONFIDENTIALITY OF COMPLAINT TO AUDIT COMMITTEE IS A VIOLATION OF SECTION 301 OF SOX AND ACTIONABLE UNDER SOX SECTION 806; FINDING THAT PERSONS TO WHOM THE IDENTITY OF THE COMPLAINANT WAS DISCLOSED WOULD HAVE GUESSED IT ANYWAY IS NOT MATERIAL TO THE RELEVANT STANDARD OF WHETHER A REASONABLE PERSON WOULD HAVE BEEN DETERRED FROM ENGAGING IN PROTECTED ACTIVITY

In Menendez v. Halliburton, Inc. , ARB Nos. 09-002, -003, ALJ No. 2007-SOX-5 (ARB Sept. 13, 2011), the Complainant, Anthony Menendez, filed confidential reports by email to the SEC and the Respondent's Audit Committee asserting questionable accounting practices with respect to revenue recognition. The Respondent's assistant general counsel forwarded the Complainant's email to the Audit Committee to the Respondent's general counsel and the CFO, in addition to the Audit Committee. The CFO forwarded this email to certain officials at the Respondent and its auditor. The SEC notified the Respondent's general counsel that it was opening an investigation and directed the Respondent to retain relevant documents. The Respondent's general counsel issued a "document retention" email to a number of company officials. That email stated that "the SEC has opened an inquiry into the allegation of Mr. Menendez." The Respondent's Chief Accounting Officer forwarded this email to 15 members of the Respondent's Finance and Accounting organization, one of whom was the Complainant. After a hearing, the ALJ concluded that the emails breaching the Complainant's confidentiality were not adverse actions under SOX Section 806 because they merely identified the Complainant to a group of people who would have known it was the Complainant in any case. The ARB disagreed because the breach violated SOX Section 301, 15 U.S.C.A. § 78j-1(m)(4), which requires that publicly traded companies to establish procedures for the confidential, anonymous submission of concerns regarding questionable accounting or auditing matters. The ARB wrote:

We consider Section 301 a critical component of SOX, legislation composed of a number of separate and distinct provisions designed to address corporate fraud and financial wrongdoing. To further this legislative intent, we necessarily construe the protection Section 301's requirement (that covered employers establish confidential channels of communication for their employees) affords consistently with SOX Section 806's anti-retaliation provisions and hold that Section 806 provides whistleblower protection to employees who make use of such channels. We agree with Menendez's argument that the right to confidentiality Section 301 affords effectively establishes a "term and condition" of employment within the meaning of Section 806's whistleblower protection provision, and that the exposure of Menendez's identity in connection with his complaint to Halliburton's Audit Committee constituted a violation of that employment term and condition.

USDOL/OALJ Reporter at 24 (footnotes omitted). The ARB found that the ALJ's conclusion that the persons receiving the email would have guessed the Complainant's identity was purely speculative and immaterial to the analysis. The ARB wrote that "Menendez need only demonstrate that such activity would deter a reasonable person from engaging in protected activity. Clearly, a reasonable employee in Menendez's position would be deterred from filing a confidential disclosure regarding misconduct if there existed the prospect that his identity would be revealed to the very people implicated in the alleged misconduct." Id . at 26 (footnote omitted).

The ARB found that substantial evidence supported the ALJ's findings that isolation, removal of duties, and demotion as alleged by the Complainant were not adverse actions. The ARB found, however, that these conditions were fallout from the disclosure of the Complainant's identity which could "constitute indicia of harm and a measure of damages to which [the Complainant] may be entitled."

Constructive Discharge

FEDERAL COURT DECISIONS

CONSTRUCTIVE DISCHARGE; 10TH CIRCUIT�S STRICKLAND REASONABLE PERSON TEST

In Lockheed Martin v. Adm. Review Bd., USDOL , No. 11-9524 (10th Cir. June 4, 2013) (case below ARB No. 10-050, ALJ No. 2008-SOX-49), the Tenth Circuit affirmed the ARB's decision in Brown v. Lockheed Martin Corp. , ARB No. 10-050, ALJ No. 2008-SOX-49 (ARB Feb. 28, 2011), in which the ARB affirmed the decision of an ALJ that Lockheed violated Section 806 of the Sarbanes-Oxley Act by constructively discharging the Complainant after she engaged in protected activity.

Background

The Complainant worked as a Communications Director and brought concerns to Lockheed's Vice President of Human Resources that the Vice President of Communications was using company funds for illicit activities. The Vice President of Human Resources submitted an anonymous complaint on the Complainant's behalf. Upon questioning by the Vice President of Communications about who reported her, the Complainant revealed that she told the Vice President of Human Resources "a few things," but stated that she was not sure if her comments resulted in the complaint. Shortly thereafter, the Complainant received a lower performance rating. In a company reorganization, the Complainant's position was advertised, and when she applied, SHE was lambasted for doing so. The Complainant was told to vacate her office and either work from home or use the visitor's office (which doubled as a storage room), lost her title and supervisory responsibilities, and was told she could not attend a communications conference that she had attended in the past. When the Complainant came to work and found that someone else was using the visitor's office, she was told that the company was looking for a cubicle for her. The Complainant protested that as a Level 5 employee with a leadership position (an "L code" classification) she was entitled to an office, but was then told that her L code was in the process of being removed. At that point, the Complainant took medical leave for depression, and filed a forced discharge/constructive discharge complaint with OSHA. The ARB affirmed the ALJ's decision finding a constructive discharge in violation of AIR21. On appeal to the 10th Circuit, Lockheed argued that the ARB's findings of fact and conclusions of law were in error as to protected activity, unfavorable personnel action, and contributing factor.

Constructive Discharge

The court stated that the Tenth Circuit's requirements for establishing constructive discharge were set forth in Strickland v. United Parcel Service, Inc. :

Constructive discharge occurs when an employer unlawfully creates working conditions so intolerable that a reasonable person in the employee's position would feel forced to resign. The plaintiff's burden is substantial. The standard is objective: the employer's subjective intent and the employee's subjective views on the situation are irrelevant. Whether a constructive discharge occurred is a question of fact.

Slip op. at 20, quoting Strickland v. United Parcel Service, Inc. , 555 F.3d 1224, 1228 (10th Cir. 2009) (quotation and citations omitted). In the instant case, Lockheed argued that the ALJ applied the wrong legal standard on constructive discharge, and the ARB incorporated that mistake in its decision.

The court found that the ALJ had recited the correct legal standard for a claim of constructive discharge, and although he had included some analysis of whether Lockheed's actions were "materially adverse" to the Complainant (the Burlington Northern standard), that analysis did not conflict with the ALJ's ultimate conclusion that the working conditions had become so objectively intolerant as to constitute a constructive discharge. The ALJ had also acknowledged that establishing constructive discharge requires a showing of an even more offensive and severe work environment than is needed to establish a hostile work environment. The court also found that the ARB had made no reference to the standard for "material adversity" and had applied the correct reasonable person standard.

Lockheed also argued that there was insufficient evidence to support the conclusion of constructive discharge of the Complainant. The court, however, recited numerous facts cited by the ALJ and the ARB indicative of constructive discharge, and found that a reasonable person would deem this evidence adequate to support a finding that the Complainant's working conditions were so intolerable that she would have viewed quitting as her only option. Although Lockheed argued that the Complainant had alternatives to quitting and left prematurely before the details of such alternatives were revealed, the court found that Lockheed failed to point to any evidence of record to show that the Complainant was ever made aware of any purported alternatives, and that Lockheed never identified any alternatives. Lockheed argued that the Complainant had repeatedly given notice that she intended to resign, and even her final resignation notice indicated that she was in control of the circumstances of her resignation. The court held that assuming this account was correct, the Complainant's "attempts to stay at Lockheed are irrelevant to the question of whether conditions were so intolerable that she had no alternative but to quit." Slip op at 25 (citation omitted).

CONSTRUCTIVE DISCHARGE IN TITLE VII CASES; PLAINTIFF'S BURDEN OF PROOF; AVAILABILITY OF THE ELLERTH/FARAGHER AFFIRMATIVE DEFENSE

In Pennsylvania State Police v. Suders , __ U.S. __, No. 03-95 (June 14, 2004), the U.S. Supreme Court rejected a Third Circuit decision under Title VII that a constructive discharge, if proven, constitutes a tangible employment action that renders an employer strictly liable and precludes recourse to the Ellerth/Faragher affirmative defense. Justice Ginsburg wrote:

Plaintiff-respondent Nancy Drew Suders alleged sexually harassing conduct by her supervisors, officers of the Pennsylvania State Police (PSP), of such severity she was forced to resign. The question presented concerns the proof burdens parties bear when a sexual harassment/constructive discharge claim of that character is asserted under Title VII of the Civil Rights Act of 1964.

To establish hostile work environment, plaintiffs like Suders must show harassing behavior "sufficiently severe or pervasive to alter the conditions of [their] employment." Meritor Savings Bank, FSB v. Vinson, 477 U. S. 57, 67 (1986) (internal quotation marks omitted); see Harris v. Forklift Systems, Inc., 510 U. S. 17, 22 (1993) ("[T]he very fact that the discriminatory conduct was so severe or pervasive that it created a work environment abusive to employees because of their . . . gender . . . offends Title VII's broad rule of workplace equality."). Beyond that, we hold, to establish "constructive discharge," the plaintiff must make a further showing: She must show that the abusive working environment became so intolerable that her resignation qualified as a fitting response. An employer may defend against such a claim by showing both (1) that it had installed a readily accessible and effective policy for reporting and resolving complaints of sexual harassment, and (2) that the plaintiff unreasonably failed to avail herself of that employer-provided preventive or remedial apparatus. This affirmative defense will not be available to the employer, however, if the plaintiff quits in reasonable response to an employer-sanctioned adverse action officially changing her employment status or situation, for example, a humiliating demotion, extreme cut in pay, or transfer to a position in which she would face unbearable working conditions. In so ruling today, we follow the path marked by our 1998 decisions in Burlington Industries, Inc. v. Ellerth , 524 U. S. 742, and Faragher v. Boca Raton, 524 U.S. 775.

See also Williams v. Administrative Review Board, USDOL , __ F.3d __, No. 03-60028 (5th Cir. July 15, 2004), 5th Cir. decision on applicability of Ellerth/Faragher hostile work environment analysis to ERA whistleblower complaints

ADMINISTRATIVE REVIEW BOARD DECISIONS

CONSTRUCTIVE DISCHARGE; CONSIDERATION OF DISCRETE CONDUCT THAT OCCURRED OUTSIDE THE LIMITATIONS PERIOD

In Barrett v. e-Smart Technologies, Inc. , ARB Nos. 11-088, 12-013, ALJ No. 2010-SOX-31 (ARB Apr. 25, 2013), the ALJ based his finding of constructive discharge on a wide pattern of aggravating events. The Respondent contended on appeal that a party alleging constructive discharge cannot rely on events that occurred more than ninety days prior to filing the complaint. The ARB held that "the ALJ correctly held that non-discrete conduct outside the statute of limitations can be relied upon when the earlier conduct only became actionable once other conduct occurring within the limitations period occurred. Cf. Nat'l R.R. Pass. Corp. v. Morgan , 536 U.S. 101 (2002)." USDOL/OALJ Reporter at 7.

CONSTRUCTIVE DISCHARGE; SUBSTANTIAL EVIDENCE SUPPORTING ALJ'S FINDING THAT COMPLAINANT RESIGNED OVER FUNDAMENTAL DISAGREEMENT OVER ACCOUNTING PRACTICES RATHER THAN PERSONNEL RELATED ADVERSE ACTIONS

CONSTRUCTIVE DISCHARGE; THE RECORD BEFORE THE ALJ DID NOT SUPPORT A CLAIM OF CONSTRUCTIVE DISHARGE BASED ON A THREAT OF FUTURE HARM

In Menendez v. Halliburton, Inc. , ARB Nos. 09-002, -003, ALJ No. 2007-SOX-5 (ARB Sept. 13, 2011), the Respondent disclosed the Complainant's identity to several officials of the Respondent and its auditor following the filing of confidential reports by email to the SEC and the Respondent's Audit Committee asserting questionable accounting practices with respect to revenue recognition. The Complainant was stunned by the disclosure and soon found himself being avoided by coworkers and auditors with whom he normally worked closely. The Complainant's counsel requested that the Respondent provide paid administrative leave given the circumstances. The Respondent approved up to six months of paid leave with benefits conditioned on the Complainant's full cooperation in SEC and company investigations into his allegations. The Complainant was replaced as a speaker at a company conference on finance and accounting. Near the end of the six month leave of absence, and after the SEC recommended no enforcement action and the company Audit Committee's investigation concluded with no changes to the company's accounting practices, the Complainant was informed that he must return to work. He would be given the same position except that he would report to the director of external reporting. The Respondent subsequently permitted the Complainant to take additional unpaid leave prior to reporting to work. The day before the scheduled return to work, the Complainant resigned stating that he considered the condition of reporting to the director of external reporting to be a demotion. He also stated that he believed that the Respondent intended to persist in violating securities laws and filing inaccurate and misleading financial information and that professionally and ethically he could not return to active employment under those conditions. During his leave of absence, the Complainant had taken a job as a consultant with a law firm.

Following a hearing, the ALJ found that the Complainant had not been constructively discharged. The ALJ found, based on the Complainant's demeanor and testimony, that the Complainant's motive for refusing to return to work for the Respondent was fundamental disagreement over the Respondent's accounting practices, and that a return to work for the Respondent was unnecessary given that he had found another job that paid at least as well and which allowed him to advocate his views on accounting issues. The ALJ found that the Complainant's decision not to return to work for the Respondent was not based on personnel related adverse action by the Respondent. The ARB found that substantial evidence supported the ALJ's findings. The ARB also stated that it would decline to find constructive discharge "based on the speculative harm inferred in the Complainant's arguments" noting that the Complainant had not returned to work and that, although the Complainant may well have been subjected to circumstances supporting a constructive discharge claim had he returned, he was not aware at the time of discharge of an intention to strictly monitor his conduct. The ARB stated that it was not ruling that threat of future harm cannot support a constructive discharge, but that the record in the instant case did not support such a claim.

ADVERSE ACTION; FAILURE OF COMPLAINANT TO MAKE A PROFFER SUFFICIENT TO SURVIVE SUMMARY DECISION SHOWING WHY A PRESS RELEASE WAS ADVERSE

CONSTRUCTIVE DISCHARGE CLAIM NOT VIABLE WHERE COMPLAINANT HAD ALREADY ACCEPTED ANOTHER JOB PRIOR TO THE ALLEDGEDLY ADVERSE ACTION

In Gattegno v. Prospect Energy Corp. , ARB No. 06-118, ALJ No. 2006-SOX-8 (ARB May 29, 2008), the former CFO wrote to the company and made general allegations of improprieties. The Complainant was appointed to serve as acting CFO and as the Chief Compliance Officer (CCO). The Complainant made a complaint about the manner in which the former CFO's allegations were being investigated. During an investigation of the Complainant's complaint, it was discovered that the Complainant had engaged in behavior inconsistent with her role as CCO, and -- based also on false statements and poor performance -- the decision was made to place the Complainant on administrative leave as acting CFO and CCO. The Complainant stated in deposition that she did not consider this action to be retaliatory - nor did she believe that she suffered any adverse consequence as a result. The Complainant was also informed that no evidence had supported her allegations of improprieties. The company then filed a Form 8-K Report with the SEC providing notice that a candidate for a new CFO had been identified and that the current CFO and CCO had been placed on administrative leave. A few weeks later the company filed another Form 8-K with a press release attached, announcing the appointment of a new CFO and a new CCO. The press release stated, inter alia, that investigation of the former CCO's (i.e., the Complainant's) allegations had not produced evidence of fraud or material deficiencies in the company's public disclosure practices. In deposition testimony, the Complainant indicated her belief that a diligent person or subsequent employer would be able to identify her as the complaining CCO; however, she did not consider the filing to be retaliatory or to have had adversely affected her.

In its next quarterly report, the company included as an exhibit a press release concerning the investigations. This time the Complainant's name was disclosed, as was the fact that the investigation had also looked into her performance. The Complainant subsequently filed her SOX whistleblower complaint with OSHA. OSHA found no reasonable cause for a finding of a violation and the matter went before an ALJ. The ALJ granted summary decision in favor of the Respondents, essentially on the ground that the Complainant had admitted that the first two filings were not retaliatory, and that she had failed to show that there was a material issue of fact regarding whether the final press release constituted an adverse employment action, having made no proffer of why the addition of her name as opposed to just her title, and the mention of review of her performance resulted in an adverse effect on her job prospect. The ALJ also rejected the Complainant's contention that the final press release was a constructive discharge because the Complainant had already accepted a new job before that release had been issued. Thus, the Complainant could not be discharged from a job from which she had already constructively resigned.

The ARB affirmed the ALJ on appeal, finding that although the Complainant had established that there were material differences between the earlier releases and the final press release, she had not established that those differences caused the final release to be adverse. The ARB observed that the ALJ had given the Complainant lengthy and precise instructions on what she needed to proffer in order to survive the Respondents' summary decision motion, but that the one witness she finally identified did not address the crucial issue. The ARB rejected the Complainant's argument that maligning a former employee is an adverse action on the ground that the press release had not maligned her (it merely reported information that had already been disclosed and did not comment on whether her performance had been found to be good or bad). The ARB also affirmed the ALJ's finding that there had been no constructive discharge, and found that the allegation - raised for the first time in the appellate brief - that the final press release was an actual discharge, was raised too late, and in any event would fail on the same grounds as the constructive discharge theory (i.e., that the Complainant had already constructively resigned by accepting other employment).

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; CONSTRUCTIVE DISCHARGE

In Reines v. Venture Bank and Venture Financial Group , 2005-SOX-112 (ALJ Mar. 13, 2007), the Complainant alleged that adverse action was taken against her because, inter alia, she was constructively discharged due to a hostile work environment. Reines , slip op. at 49-56. The ALJ held that Complainant did not prove she was constructively discharged or the existence of a hostile work environment. Reines , slip op. at 56. The ALJ noted that although the removal of Complainant's IT duties was an adverse action, "Complainant did not remain with Respondent long enough to clarify the nature of the restriction imposed by [her supervisor] or to determine what effects it would have on her ability to perform her job." Id. at 56. He held that Complainant could have reasonably resolved the issue without having resigned. Id. Applying the standard set forth in Pennsylvania State Police v. Suders , 124 S.Ct. 2342 (2004), the ALJ held that Complainant did not establish that her "working conditions were rendered so difficult, unpleasant, and unattractive that a reasonable person would have felt compelled to resign, such that the resignation is effectively involuntary." Id . Furthermore, the ALJ concluded that Complainant did not show that the conduct she complained of was "serious and pervasive" enough to evoke a hostile work environment. Id .

CONSTRUTIVE DISCHARGE; SUPERVISOR'S CRITICISM OF E-MAIL COMMUNICATION STYLE AND STATEMENT THAT COMPLAINANT'S EMPLOYMENT STATUS WOULD BE CONSIDERED OVER THE WEEKEND; SUBJECTIVE STRESS VERSUS OBJECTIVE VIEW OF SITUATION

In Hughart v. Raymond James & Associates, Inc. , 2004-SOX-9 (ALJ Dec. 17, 2004), the Complainant had determined that certain shares of limited partnerships were being improperly traded over-the-counter, and - to alert his supervisors - sent an e-mail outlining his concerns. The e-mail was titled "fraud alert." In a meeting, the Complainant's supervisor expressed her disagreement with the Complainant's determination but reserved judgment because of her observation that neither she nor the Complainant were experts in the subject; the Complainant adamantly disagreed. The supervisor then criticized the Complainant's use of the term "fraud alert," stating that it was inappropriate, that it was an example of his tendency to overstate and mis-communicate, and that she could not continue to permit him to communicate in such manner. She stated that she had to consider his employment status over the weekend and threatened to terminate him if he continued to mis-communicate. The Complainant did not understand the criticism and felt abandoned by his supervisor, misunderstood and the verge of being fired.

The ALJ found that the Complainant's responses and feeling at this end of this meeting were understandable, but that the meeting had not objectively created a work environment so completely hostile that he had no choice but to resign. The ALJ noted that rather than resign, the Complainant could have accepted the feedback and committed to changing his e-mail communication style. The ALJ also noted that the supervisor was apparently conflicted. The Complainant was recognized as a valuable employee, but had in her view significant problems with his communication style. When the Complainant returned to offer his resignation, the supervisor did not simply accept it but stated that she was not firing him and that he needed to think about what he was doing.

The ALJ recognized that the supervisor's statements may be considered a threat of termination, but observed that there was no evidence of a pattern of such threats or other abuse by the supervisor such that the Complainant was compelled to resign. The ALJ acknowledged that the Complainant's perception of stress may have been subjectively accurate, but viewed objectively, the supervisor's criticism did not rise to the level of abuse that justified resignation.

Demotion/Reduced Responsibilities

FEDERAL COURT DECISIONS

ADVERSE ACTION UNDER SOX; AN ADVERSE ACTION IS A MATERIAL ADVERSE CHANGE IN THE TERMS AND CONDITIONS OF EMPLOYMENT, AND THE PLAINTIFF ALLEGED SUFFICIENT MATERIAL ADVERSE ACTIONS TO DEFEAT A MOTION TO DISMISS

In Kolchinsky v. Moody's Corp. , No. 10 Civ. 6840(PAC), 2012 WL 639162 (S.D.N.Y. Feb. 28, 2012), the plaintiff was Managing Director of the Derivatives Group at Moody's, a nationally recognized rating organization (NRSRO), who reported concerns to his supervisor when he discovered that Moody's planned to use outdated rating methodologies to a line of asset-backed securities CDOs. Believing that proceeding would violate federal securities laws and SEC rules, the plaintiff complained to Moody's Head of Credit Policy when his immediate supervisor was not responsive to his complaints. According to the plaintiff, he began suffering retaliation shortly thereafter, and alleges that he was excluded from meetings, demoted and had his salary and bonuses reduced. A year after his initial complaints, the plaintiff, after being asked for his opinion, criticized the new credit rating methodology promoted by the defendant's Derivative's Group as "irresponsible." Soon after, he was transferred to a "support" role, a move that the plaintiff perceived as retaliatory and detrimental to his future promotion prospects. Over the next sixth months, the plaintiff reported additional concerns related to Moody's rating methodologies, leading the defendant to hire a law firm to investigate his claims. Although the plaintiff asserts that he otherwise cooperated with the investigators, he declined to meet with the investigative team without his own attorney present, and as a consequence, the defendant suspended him for failure to cooperate. The plaintiff alleged in his SOX whistleblower complaint that this suspension amounted to constructive termination, noting that his name was removed from the company's directory, he was forced to return all company property, and was told that he would not be doing any work for Moody's again.

The defendant's motion to dismiss the plaintiff's claim argued that because the plaintiff was suspended without pay, he failed to allege that he suffered an adverse employment action. The district court stated that "a materially adverse change in the terms and conditions of employment" are all that are required to suffer an adverse employment action, and by alleging that he was excluded from meetings, demoted, given reduced salary and bonuses, transferred to a support role, suspended, and constructively terminated, the plaintiff pled adverse action sufficient to defeat a motion to dismiss.

ADVERSE EMPLOYMENT ACTION NOT SHOWN BY ACTIONS THAT MERELY INCONVENIENCED THE PLAINTIFF, DID NOT CONSITUTE A SIGNFICIANT DIMINUTION OF RESPONSIBILITIES, OR HAD NOT ELMINATED A ROUTINE PART OF THE PLAINTIFF'S EMPLOYMENT

In Fraser v. Fiduciary Trust Co., Int'l , No. 1:04-cv-06958 (S.D.N.Y. Aug. 25, 2009) (case below 2003-SOX-28), the court found that three acts identified by the Plaintiff as retaliatory were not adverse employment actions. First, moving the Plaintiff's desk close to his supervisor's desk was no more than a mere inconvenience. Second, relieving the Plaintiff of responsibility for a client newsletter might constitute an alteration of job responsibilities, but it did not represent a significant diminution of those responsibilities. Third, curtailment of invitations to certain committee meetings was not adverse because the invitations had only been extended there was extra room available, and the Plaintiff's attendance at those meetings was not a routine part of his employment in the first place.

ADVERSE EMPLOYMENT ACTION; LOSS OF JOB RESPONSIBILITIES

In Willis v. Vie Financial Group, Inc. , No. Civ.A. 04-0435 (E.D. Pa. Aug. 6, 2004) (available at 2004 WL 1774575), the defendant argued that a claim based on loss of job responsibilities should be dismissed because it is not one of the enumerated acts that constitute a violation of the SOX whistleblower provision. The court, however, held that the complaint sufficiently alleged a change in employment conditions within the meaning of the Act, citing Glanzman v. Metro. Mgmt. Corp. , 290 F.Supp.2d 571, 582 (E.D. Pa. 2003) (recognizing that significantly diminished material responsibilities can constitute a materially adverse change in working conditions).

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; DIMINUTION IN AUTHORITY AND RESPONSIBILITY

In Reines v. Venture Bank and Venture Financial Group , 2005-SOX-112 (ALJ Mar. 13, 2007), the Complainant alleged that adverse action was taken against her because, inter alia, she was removed from her IT responsibilities. Reines , slip op. at 49-56. The ALJ held that Respondent acted adversely under SOX by removing Complainant's sole authority over IT duties. Reines , slip op. at 55. The ALJ noted that whether Complainant's IT duties were "peripheral" rather than central to her role as CFO, as Respondent asserted, was immaterial. Id . at 54. The ALJ concluded that "the restriction imposed by [Complainant's supervisor], which represents a diminution in Complainant's authority and responsibility, is the type of action which is "reasonably likely to deter employees from engaging in protected activity." Id . at 55. Here, as in McClendon, the ALJ used the standard set by the Supreme Court in Burlington Northern : whether a reasonable employee would be dissuaded from whistleblowing based on the alleged adverse action. See id . at 55.

ADVERSE EMPLOYMENT ACTION; REMOVAL OF COMPLAINANT'S STATUS AS OFFICER OF THE COMPANY

In Bechtel v. Competitive Technologies, Inc. , 2005-SOX-33 (ALJ Oct. 5, 2005), the ALJ, citing caselaw to the effect that an employment action must produce some tangible job consequence to be considered an "adverse action" within the context of the SOX, found that the Respondent had not engaged in adverse action when it removed the Complainant's status as an officer of the company. The Complainant had not even known that he was considered an officer until he asked to be relieved of the obligation to sign SOX disclosure statements. Further, there was no evidence that the change in status in any way deprived the Complainant of the ability to fully represent the company or hampered him in performance of his job duties. There was also no evidence that the Complainant lost salary or other privileges, or was otherwise adversely impacted in his employment.

Failure to Hire

ADMINISTRATIVE REVIEW BOARD DECISIONS

REFUSAL TO HIRE; COMPLAINANT MUST SHOW THAT HE PROPERLY APPLIED TO AN OPEN POSITION AND THAT HE WAS QUALIFIED

In Levi v. Anheuser Busch Companies, Inc. , ARB No. 08-086, ALJ No. 2008-SOX-28 (ARB Sept. 25, 2009), the ARB held:

[I]n a case dealing with an applicant and prospective employer, the successful complainant must show that he properly applied to an open position for which the company was seeking applicants and that he was qualified.

In the instant case, the Complainant failed to offer evidence that he properly applied for a job for which the Respondent was seeking applicants and that he was qualified. The ARB wrote:

Indisputably, if the employer is not hiring for a position to which an applicant sends an unsolicited letter offering his services, the employee does not suffer an adverse action, if he is not hired. As the ALJ noted, "[a] simple wish to be rehired is not an adverse employment action under the Act as related to a former employee."

USDOL/OALJ Reporter at 5-6 (footnote omitted). Moreover, the ARB found that the Complainant's bare claim that he had worked in job for which an Internet job posting had been made, was insufficient because the Complainant had presented no evidence that he satisfied the requirements or competencies or had the required experience for the job.

Paid Administrative Leave

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE ACTION; PAID ADMINISTRATIVE LEAVE

Paid administrative leave may be considered an adverse action under certain circumstances. Vannoy v. Celanese Corp. , ARB No. 09-118, ALJ No. 2008-SOX-64 (ARB Sept. 28, 2011), citing Van Der Meer v. Western Ky. Univ. , ARB No. 97-078, ALJ No. 1995-ERA-38, slip op. at 4-5 (ARB Apr. 20, 1998), in which the ARB had held that, although an associate professor was paid throughout his involuntary leave of absence, he was subjected to adverse employment action by his removal from campus.

Failure to Promote

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; FAILURE TO PROMOTE; ABSENCE OF EVIDENCE THAT COMPLAINANT ACTUALLY APPLIED FOR POSITION

In Hughart v. Raymond James & Associates, Inc. , 2004-SOX-9 (ALJ Dec. 17, 2004), the ALJ found that the Complainant did not establish an adverse action based on failure to promote where the Complainant did not present sufficient evidence to establish that he actually applied for a position for which he met the requisite qualifications.

Hostile Work Environment

ADMINISTRATIVE REVIEW BOARD DECISIONS

HOSTILE WORK ENVIRONMENT; ORDINARY TRIBULATIONS OF THE WORKPLACE

In Allen v. Stewart Enterprises, Inc. , ARB No. 06-081, ALJ Nos. 2004-SOX-60 to 62 (ARB July 27, 2006), the ARB observed that the ALJ applied both a "tangible job consequences" and a "detrimental effect" test in determining whether the Respondent engaged in adverse employment action against the Complainants. The Board explained that:

A "tangible job consequence" is one that "constitutes a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing significant change in benefits." Under the "detrimental effect" test, an employment action is adverse if it is reasonably likely to deter employees from making protected disclosures.

Slip op. at 14. The ARB affirmed the ALJ's finding that the Respondent's use of monthly "contract error reports" was not adverse action where there were no tangible job consequences for the Complainants for charged errors, and the reports would not have deterred others from engaging in protected activity. The ARB also affirmed the ALJ's finding that a workspace relocation was not adverse action where the new conditions did not affect the Complainants' ability to perform their work and did not significantly change their employment status, and where the Complainants presented no evidence that the new locations would deter other employees from making protected disclosures.

In regard to the Complainants allegations of a hostile work environment based on "stonewalling" and "friction," the ARB observed that the evidence did not show that such circumstances were pervasive, humiliating or interfered with the Complainants' work performance. The Board wrote: "These ordinary tribulations of the workplace do not rise to the level of adverse actions because they do not result in tangible job consequences or deter employees from engaging in protected activity." Slip op. at 16.

ADMINISTRATIVE LAW JUDGE DECISIONS

HOSTILE WORK ENVIRONMENT; ROUTINE WORKPLACE IRRITATIONS AND INCONVENIENCES

In Grove v. EMC Corp. , 2006-SOX-99 (ALJ July 2, 20007), the ALJ found that the Complainant failed to establish the existence of a hostile work environment where, after being reinstated, the Complainant had problems with his company e-mail and Virtual Private Network. The Complainant did not report the problems to IT personnel because he "was not interested in tracking down technical support to figure out something that was terminated purposely by my management." Slip op. at 20 (quoting transcript). Neither did the Complainant inquire with his managers about the problems. The ALJ found that a reasonable person would have contacted technical support before assuming that the problems related to a sinister conspiracy. The ALJ found that the remainder of the acts related to routine workplace irritations and inconveniences typically experienced by new employees, without altering working conditions or detrimentally affecting a reasonable person (delay in getting a laptop and business cards; loss or mishandling of personnel documents).

ADVERSE ACTION; HOSTILE WORK ENVIRONMENT; DISTINCT EVENTS; DIFFERENT TREATMENT BY CO-WORKERS, STANDING ALONE, INSUFFICIENT TO ESTABLISH

In McClendon v. Hewlett Packard, Inc. , 2006-SOX-29 (ALJ Oct. 5, 2006), the ALJ found that the Complainant failed to establish the existence of a hostile work environment. McClendon, slip op. at 80. The ALJ reiterated the standard set forth by the U.S. Supreme Court in Harris v. Forklift Sys. , stating that to establish a hostile work environment, the conduct must be "'sufficiently severe or pervasive to alter the conditions of . . . employment and create an abusive working environment.'" Id. at 80, citing to Harris , 510 U.S. 17, 21 (1993). The ALJ noted the difference "between a hostile work environment, which 'involves repeated conduct' and discrete discriminatory acts, which 'are easy to identify . . . [and] constitute a separate actionable unlawful employment practice.'" Id . at 81, citing to Nat'l Railroad Passenger Corp. v. Morgan , 536 U.S. 101, 114-115 (2002). The ALJ observed that while Complainant referred to a hostile work environment, he never specifically alleged a hostile work environment claim. McClendon, slip op. at 80. Therefore, the ALJ considered the discriminatory acts alleged by Complainant in both of his SOX complaints. See id. at 81.

In regards to Complainant's first SOX claim, the ALJ ruled that the alleged events, including Complainant's receipt of a performance warning, a demotion from his position, and a pay decrease, did not involve repeated conduct and were easy to identify as separate acts. McClendon , slip op. at 81. Therefore, he ruled that these events were only admissible as background evidence and were not actionable as part of a hostile work environment claim. Id. at 81. Likewise, the ALJ held that the alleged events in Complainant's second SOX claim, including Complainant's transfer to a new section and changes in his reporting structure and position, were each "distinct and in response to changes within the work environment." Id. at 82. The ALJ noted that even though Complainant testified to receiving less favorable treatment from his co-workers following the filing of his SOX claims, "different treatment is not sufficiently severe to constitute a hostile work environment." Id. at 82.

HOSTILE WORK ENVIRONMENT; CRITIQUE OF MANNER OF COMMUNICATIONS AND TRANSFER OF ISSUES TO OTHER DEPARTMENTS FOR RESOLUTION

In Hughart v. Raymond James & Associates, Inc. , 2004-SOX-9 (ALJ Dec. 17, 2004), the ALJ found that severe critique of the manner in which the Complainant handled inter-departmental communications, and the managerial decision to transfer an issue raised by the Complainant to another department, did not rise to the level of a hostile work environment. The ALJ found that although the Complainant was offended by the transfer, the decision to do so did not appear to be abusive because the Complainant's position was specifically to discover and research pending problems; once the source of a problem was found, the supervisors had discretion to transfer the matter to a department better suited, in their opinions, to resolve the issue. The Complainant had consistently received positive performance appraisals; the appraisals acknowledged the Complainant's value to the company, but also identified a tendency to be overzealous. The ALJ found that the supervisors were appropriately reacting to the situations created by the Complainant's methods and procedures.

ADVERSE ACTION; VERBAL ABUSE

In Reines v. Venture Bank and Venture Financial Group , 2005-SOX-112 (ALJ Mar. 13, 2007), the Complainant alleged that adverse action was taken against her because, inter alia, her authority was questioned by her supervisor during weekly management meetings, and she was "verbally abused" by her supervisor at a meeting in front of peers. Reines , slip op. at 49-56. The ALJ found that the Complainant's assertions that she was belittled, humiliated and questioned by her supervisor in weekly management meetings were not corroborated by any witnesses or supported by other evidence in the record. Id . at 49. Thus, the ALJ held that Complainant was not mistreated by her supervisor after she raised concerns about his proposed stock trade. Id. at 51. In addition, the Court ruled that even if the alleged adverse actions were established, they were not distinguishable from the supervisor's usual manner of "micro-management" which had been the cause of complaints from many employees during the course of Complainant's employment. Id. at 51. In regards to Complainant's allegation that she was verbally abused by her supervisor during a staff meeting, the ALJ found Complainant's testimony of the account to be inconsistent with the accounts of several other witnesses. Reines , slip op. at 53. The ALJ held that this, combined with the lack of other support in the record, failed to establish an adverse action under SOX. Id .

Increased Scrutiny of Work

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; TANGIBLE JOB CONSEQUENCES; ERROR RATE INCREASE; WORKSPACE REALLOCATION

In Allen v. Stewart Enterprises, Inc. , 2004-SOX-60, 61 and 62 (ALJ Feb. 15, 2005), the ALJ found that neither a higher error rate nor workspace reallocations had sufficiently tangible job consequences to constitute adverse employment action. Although several Complainants' bonuses were tied to low error rates, both employees continued to achieve good work evaluations and they did not show any tangible job consequence. Similarly, although several Complainants were unhappy with new workspace because it did not have some amenities of their old workspace, the new workspace did not compromise their ability to complete job tasks or negatively affect their employment. The ALJ also pointed out that none of the Complainants had been singled out in regard to the error rates or workspace allocations. The increased error rate standard applied to the entire division and the workspace reallocation applied to other workers besides the Complainants.

Layoffs/Recorganization

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE EMPLOYMENT ACTION; TANGIBLE JOB CONSEQUENCE ANALYSIS VIS-A-VIS TITLE VII INTERPRETATIVE LAW IN CIRCUIT IN WHICH CASE AROSE; UNDER AN EXPANSIVE DEFINITION, PLACEMENT ON A LAY-OFF LIST IS ADVERSE ACTION, BUT NON-SEVERE AND NON-PERVASIVE ACTIONS ARE NOT

In Hendrix v. American Airlines, Inc. , 2004-AIR-10, 2004-SOX-23 (ALJ Dec. 9, 2004), the ALJ thoroughly analyzed discordant administrative decisions relative to the meaning of "adverse action" under various whistleblower laws, and specifically the concept of tangible job consequence. She concluded that, although Title VII decisions are not binding precedent for purposes of a whistleblower claim, they provide helpful guidance. The ALJ also concluded that she should look to the law of circuit in which the claim arises. Because the instant case alleging violations of both the AIR21 and SOX whistleblower laws arose in the Tenth Circuit, she applied the expansive definition of adverse action found in Hillig v. Rumsfeld , 381 F.3d 1028 (10th Cir. 2004), in which the court held that the fact that unlawful personnel action turned out to be inconsequential goes to damages, not liability, although the standard does not encompass mere inconvenience or alteration of job responsibilities. In a footnote, the ALJ observed that the Sarbanes Oxley Act contains language, unlike other whistleblower laws, explicitly prohibiting threats and harassment -- acts which are not necessarily tangible and not ultimate employment actions.

Applying this standard, the ALJ found that the Complainant's placement on a lay-off list constitutes an adverse action, even though the Complainant suffered no tangible consequence as his name was removed before the lay-offs took effect. [Later in the decision, however, the ALJ found that there was no connection between protected activity and the placement on the lay-off list].

The Complainant also raised a hostile work environment claim. The ALJ initially parsed out which portions of the claim were timely raised. She found that claims of verbal abuse, assignment to a second shift, and denial of access to computer resources were timely raised. The ALJ, however, found these actions were not so severe and pervasive that they altered the terms of the Complainant's employment -- they were the kinds of inconvenience an employee should expect to endure in the normal workplace.

Litigation Conduct

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE EMPLOYMENT ACTION; WHERE COMPLAINANT VOLUNTARILY AGREED TO PAY COSTS OF ARBITRATION (WHICH THE RESPONDENT NORMALLY WOULD INCUR AS AN EMPLOYMENT BENEFIT TO EMPLOYEES) IN EXCHANGE FOR RESPONDENT'S AGREEMENT TO DISMISSAL OF ARBITRATION, THE RESPONDENT'S FILING OF A DISTRICT COURT ACTION TO CONFIRM THE COMPLAINANT'S LIABILITY FOR THE ARBITRATION COSTS WAS NOT A RETALIATORY ACTION

In Rowland v. Prudential Equity Group, LLC , ARB No. 08-108, ALJ No. 2008-SOX-4 (ARB Jan. 13, 2010), the Complainant had filed an EEOC claim against the Respondent, and under NASD rules, the claim was referred to arbitration. The Complainant then sought to consolidate this claim with an action she had filed in federal district court. As a condition to dismissal of the arbitration without prejudice, the Complainant agreed to pay all of the Respondent's fees and costs connected with the arbitration matter, which amounted to $137,795.82. Several months later, the Complainant filed a SOX complaint with DOL. Later, the Respondent filed an action in federal district court seeking confirmation of the arbitration award. The district court granted the relief. The Complainant then filed a second SOX complaint with DOL alleging that the district court action to confirm the arbitration award was in retaliation for the filing of her previous SOX complaints.

On appeal, the ARB, viewing the evidence in the light most favorable to the Complainant, assumed that the Respondent offered an employment benefit of paying for mediation and arbitration expenses and its own attorney's fees; that the parties engaged in mediation and arbitration; and that the Complainant was the only employee of the Respondent who ever had to pay for mediation and arbitration and related attorney fees. Nonetheless, the ARB found that the Respondent's filing of the district court action had not adversely affected an employment benefit to which she was entitled (the right not to pay for mediation, arbitration and attorney's fees), because she in effect forfeited the right to that benefit when she voluntarily agreed to pay for that benefit in exchange for the Respondent's agreement to dismiss the arbitration action. Thus, the Respondent could not be said to have treated the Complainant differently, or have discriminated against the Complainant with respect to the arbitration-costs benefit.

ADVERSE EMPLOYMENT ACTION; FILING OF CIVIL SUIT AGAINST COMPLAINANT FOR TORTIOUS INTERFERENCE

In Farnham v. International Manufacturing Solutions , ARB No. 07-095, ALJ No. 2006-SOX-111 (ARB Feb. 6, 2009), the ARB agreed with the ALJ that the Respondent's filing of a civil suit against the Complainant alleging tortious interference with the Respondents' loan transactions, slander, and intentionally infliction of emotional distress, was not proved to be adverse employment action under the SOX. The ARB wrote: "The SOX defines adverse action as discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against an employee in the terms and conditions of his or her employment. [The Complainant'] has failed to establish how [the] filing [of the] civil suit against [him]... injured him in any way in relation to 'the terms and condition of his employment.'" USDOL/OALJ Reporter at 10 (footnote omitted).

ADVERSE ACTION; STATEMENTS OF COUNSEL DURING LITIGATION

In Levi v. Anheuser Busch Companies, Inc. , ARB Nos. 06-102, 07-020, 08-006, ALJ Nos., 2006-SOX-27 and 108, 2007-SOX-55 (ARB Apr. 30, 2008), the Complainant filed a SOX complaint on the ground that the Respondent's counsel allegedly made false statements in a motion to dismiss an earlier complaint filed by the Complainant. The Complainant alleged that the statements were designed to "derail" his SOX complaint, and blacklist him. The ARB agreed with the ALJ that the statements of the Respondent's counsel were not evidence, and that false statements would go to the party's credibility and not to whether it established an element of its case. The ARB found therefore that the statements did not constitute a separately actionable adverse action.

ADMINISTRATIVE LAW JUDGE DECISIONS

EMPLOYEE; ADVERSE ACTION; FILING OF ANTI-SLAPP SUIT

In Pittman v. Siemens AG , 2007-SOX-15 (ALJ July 26, 2007), the Complainant alleged that the Respondents engaged in adverse action when they filed an anti-SLAPP claim against the Complainant relating to a defamation suit in state court. The Complainant alleged that this suit was in retaliation for his filing of the SOX claim with OSHA. The ALJ, however, found that the Complainant had not been an employee of the Respondent for more than one and a half years prior to the filing of the anti-SLAPP motion. Since he was not an employee at time, and the anti-SLAPP suit was not blacklisting or interference with employment, the ALJ found that it was not adverse action under the whistleblower provision of the SOX.

ALLEGEDLY FALSE STATEMENTS OF COUNSEL IN PRIOR SOX CASE AS AN INDEPENDENT CAUSE OF ACTION

In Hunter v. Anheuser-Busch , 2006-SOX-108 (ALJ Oct. 18, 2006), the Complainant alleged that certain statements made by the Respondent's counsel in a motion to dismiss filed in an earlier SOX case, 2006-SOX-37, were false and retaliatory attempts to derail his SOX complaint and to avoid rehiring him and to blacklist him. The ALJ found that the allegedly false statements were objected to and were, in part, a basis for a pending appeal of the decision in the first case. Thus, the ALJ found that the Complainant's allegations were subsumed in the earlier action. The ALJ also found that the alleged false statements did not present an independent action under SOX because the earlier case had been dismissed as untimely, there had been no evidentiary development presented to the ALJ in the prior case, and therefore the fraud or perjury alleged did not arise in the first action.

ADVERSE EMPLOYMENT ACTION; LAWSUIT TO ENJOIN COMPLAINANT FROM VIOLATING CONFIDENTIALITY AGREEMENT

In Vodicka v. DOBI Medical International, Inc. , 2005-SOX-111 (ALJ Dec. 23, 2005), the Complainant, who had been a member of the Respondent's board of directors, filed a SOX whistleblower complaint alleging violation of that law by the Respondent when it filed a lawsuit seeking injunctive relief in the state of New York against the Complainant on the ground that he had allegedly violated his confidentiality agreement with the Respondent. The ALJ observed that Section 806(a) of the Act prohibits retaliation against an employee in regard to the terms and conditions of employment, and that the implementing regulations at 29 C.F.R. § 1980.102 similarly provide that a company may not discrimination against any employee with respect to the employee's compensation, terms, conditions, or privileges of employment. The ALJ concluded: "Here the lawsuit sought to enforce the confidentiality agreement by compelling Complainant to return confidential documents to Respondent and requiring him not to disseminate confidential information to other persons. Complainant has provided no explanation as to how this lawsuit could affect his ability to obtain future employment or the terms or conditions of such employment, and I can think of none." The ALJ, therefore, granted summary decision in favor of the Respondent.

An issue in the case not reached by the ALJ was whether a member of a board of directors is a covered employee under Section 806(a).

Offering Severance Benefits in Return for a General Release

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; OFFER OF SEVERANCE BENEFITS IN RETURN FOR COMPLAINANT'S GENERAL RELEASE AND AGREEMENT NOT TO REPORT ALLEGED UNLAWFUL CONDUCT

In Rzepiennik v. Archstone Smith, Inc. , 2004-SOX-26 (ALJ Feb. 23, 2007), the Complainant had been employed by the Respondent, an apartment investments and operations company, as a Production Officer whose duties included reviewing and approving payment requisitions from general contractors. The Complainant was terminated, and did not timely file a SOX complaint about that action. Accordingly, his complaint had to be based on post-termination adverse action. Almost one year following the termination, the Complainant received a letter from the Respondent informing him that the Respondent was offering a bonus payment of $255,589 in consideration of the Complainant's efforts in reporting alleged unlawful conduct; however, the offer was contingent on the Complainant taking no further legal action against the Respondent or reporting the information to any other person or regulatory agency. Because the Complainant was not employed by the Respondent on the date of the offer, it was not offered under the Respondent's bonus program. The offer provided 21 days to accept. The Complainant declined and subsequently filed the instant SOX complaint.

Because the question of whether such an offer constituted adverse employment action was novel under the SOX, the ALJ reviewed authority under Title VII, and found that courts have ruled that (1) offering severance benefits in return for a general release is neither discriminatory nor retaliatory, and (2) Title VII complainants do not suffer adverse employment action when an employer fails to pay severance benefits to which the complainant was not otherwise entitled because the complainant refused to sign the agreement. Slip op. at 13-14, citing, inter alia , EEOC v. Sundance Rehabilitation Corp., 466 F.3d 490 (6th Cir. 2006). Applying this authority, and finding no facts set forth indicating that the Complainant was entitled to the bonus, the ALJ found that there had been no tangible consequence on the conditions of the Complainant's employment.

The ALJ distinguished Connecticut Light & Power v. Sec'y of U.S. Dept. of Labor , 85 F.3d 89 (2d Cir. 1996), an ERA whistleblower case, on the ground that (unlike this case) in that case the complainant was relying on a continuing violation theory, the court had found that tactics used to prolong settlement negotiations were in themselves adverse, and the negotiations had been broken off by the Respondent. In addition, in the Connecticut Light & Power case, the settlement arose out of litigation pending in another forum. The ALJ also observed that under the ERA, the NRC had adopted a regulation which explicitly forebade employers from conditioning severance packages on agreements not to provide information to the NRC (10 C.F.R. § 50.7(f) (1994)), and that although that regulation had been found inapplicable by the Second Circuit, it found the policy concerns underlying that rule of "special protection" relating to nuclear safety were persuasive. The ALJ found no legal authority expressing comparable concerns about settlement agreements under SOX. The ALJ also noted that, because of the novelty of the issue, she had invited amicus briefs from both the Assistant Secretary of Labor for OSHA and the SEC, see Rzepiennik v. Archstone Smith, Inc ., 2004-SOX-26 (ALJ Nov. 7, 2006) (five page order requesting amicus briefs, which sets out the issue in detail), and both had declined to submit briefs, suggesting that the policy concerns behind the SOX are not the same as the policy concerns behind the ERA. The ALJ also interpreted the SEC's lack of response as indicating that the SEC had concluded that the confidentiality of a settlement agreement neither directly impacts federal securities law nor raises policy considerations of significance to the SEC.

Performance Evaluation

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; FAILURE TO CONDUCT PERFORMANCE EVALUATION

In Bechtel v. Competitive Technologies, Inc. , 2005-SOX-33 (ALJ Oct. 5, 2005), the ALJ, found that no adverse action was implied by the Respondent's failure to conduct a review of Complainant's performance where the record did not show that this omission resulted in a loss of pay, raises, bonus, benefits, or negatively impacted Complainant's employment conditions in any way.

ADVERSE EMPLOYMENT ACTION; TANGIBLE JOB CONSEQUENCES MUST ACCOMPANY A NEGATIVE PERFORMANCE EVALUATION

In Dolan v. EMC Corp. , 2004-SOX-1 (ALJ Mar. 24, 2004), the ALJ, in the course of considering the issue of whether the complaint was timely filed, ruled that although the Complainant had received a negative performance evaluation, he had not shown "that it resulted in a lower salary, directly jeopardized his job security, or caused any tangible job detriment." Citing ARB and Federal case law, the ALJ found that, in the absence of such a showing, the performance evaluation could not be considered an adverse employment action. Therefore, the Respondent's later refusal to remove the performance evaluation from the Complainant's file (the only discrete act within the limitations period for filing a SOX whistleblower complaint), was also not an adverse employment action, and therefore the Complainant failed to show that he had timely filed a complaint within 90 days of an adverse employment action.

Refusal to Communicate With the Complainant

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE EMPLOYMENT ACTION; REFUSAL TO ACCEPT CERTIFIED MAIL SENT BY THE COMPLAINANT

In Harvey v. The Home Depot, Inc. , 2004-SOX-77 (ALJ Nov. 24, 2004), the Complainant filed a complaint alleging that the Home Depot vice president for legal matters violated the employee protection provision of the Sarbanes Oxley Act by refusing to accept delivery of the Complainant's certified, restricted delivery, mail to the vice president, containing legal matters. The Complainant's theory was that by refusing to accept his legal correspondence, the vice president endangered the company's interests and failed in his fiduciary duties, thereby perpetrating a fraud on the company and shareholders. The ALJ found that the complaint failed to state a claim for which relief can be granted because the vice president's act did not adversely impact on the terms or conditions of the Complainant's former employment with the Respondent, nor on his ability to obtain subsequent employment. Although the Complainant attempted to link the mail refusal to a claim of blacklisting, the ALJ found that the act of refusing mail is not blacklisting.

Setting Conditions About Continued Employment

ADMINISTRATIVE REVIEW BOARD DECISIONS

ADVERSE EMPLOYMENT ACTION; PRESENTATION OF COMPLAINANT WITH DOCUMENTS DESCRIBING "GROUND RULES" AND "HOPES AND FEARS" OF SUBORDINATES ABOUT THE COMPLAINANT'S RETURN TO WORK

In Halloum v. Intel Corp. , ARB No. 04-068, 2003-SOX-7 (ARB Jan. 31, 2006), the Complainant was presented with documents entitled "Ground Rules" and "Hopes and Fears" upon his return to work from a medical leave of absence. During this leave, the Complainant had filed a complaint with the SEC and management alleging fraud against shareholders, and an investigation of the allegations was instituted. The ARB agreed with the ALJ that the "Ground Rules" document was only an agenda for the meeting and not discriminatory on its face. The "Hopes and Fears" document related discussions with the Complainant's subordinates about their feelings about the Complainant's return to work. The ARB agreed with the ALJ's finding that this document "was the result of a standard exercise [the Respondent] utilized to inform its employees that they would be protected from reprisal or intimidation after changes in management." Slip op. at 7. The ARB, therefore concluded that neither document constituted an unfavorable personnel action.

The ARB, however, also agreed with the ALJ that modifications to a Corrective Action Plan that were unreasonable and incapable of completion within the allotted time did constitute an unfavorable personnel action.

Transfer

FEDERAL COURT DECISIONS

DISTRICT COURT DENIED SUMMARY JUDGMENT ON THE ISSUE OF WHETHER AN EMPLOYMENT TRANSFER AND BANISHMENT FROM A FIELD OF EMPLOYMENT WAS AN ADVERSE EMPLOYMENT ACTION UNDER SOX

In Schlicksup v. Caterpillar, Inc . , No. 09-CV-1208 (C.D.Ill. July 13, 2010), the plaintiff alleged that he was transferred from his tax/finance position to a new information technology position in retaliation for reporting his concerns that one of the defendant's structures illegally avoided U.S. taxes. Under the Title VII adverse employment standard, an employment action is adverse if it would "dissuade a reasonable worker from filing a charge." In its motion for summary judgment, the defendant asserted that no reasonable person in the plaintiff's position would have been dissuaded from filing a complaint because the plaintiff did not lose any compensation, privileges, or benefits as a result of his transfer. In fact, when the plaintiff was transferred his compensation increased and his salary grade, performance rating and potential assessments remained the same. The Court, however, concluded that these facts were not dispositive and that a materially adverse action may still have occurred within the constellation of surrounding circumstances.

The plaintiff alleged that he suffered adverse employment action despite the financial advantage of his transfer because the defendant's actions limited his career prospects. The Seventh Circuit previously held that an action leading to a loss of "career prospects" can be an adverse employment action. The plaintiff alleged that he was told that he could no longer work in tax or finance, which the District Court found to be sufficient evidence to ward off a motion for summary judgment. The Court found that such banishment would leave the plaintiff with fewer potential positions than he would have had if those career paths were open. Thus, it was an issue of fact whether or not such banishment would deter a reasonable person in the plaintiff's situation.

ADMINISTRATIVE LAW JUDGE DECISIONS

ADVERSE ACTION; APPLICATION OF BURLINGTON NORTHERN ; TRANSFERS

In McClendon v. Hewlett Packard, Inc. , 2006-SOX-29 (ALJ Oct. 5, 2006), the ALJ relied on the U.S. Supreme Court's ruling in a Title VII retaliation action that, to prove an adverse action, a plaintiff "must show that a reasonable employee would have found the challenged action materially adverse, 'which in this context means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.'" McClendon , slip op. at 76, citing to Burlington Northern & Santa Fe Railway Co. v. White , No. 05-259, 2006 WL 1698953 (U.S. 2006).

The ALJ ruled that Complainant's transfer to a different section and a change in his reporting structure was not an adverse action. Complainant was one of thirty people transferred to a new section as a result of a corporate restructuring. See McClendon , slip op. at 76. Based on past history, Complainant explained to management that he was reluctant to be supervised by the head of his newly assigned section. McClendon, slip op. at 76-77. He was assured that he would be reporting to a different project manager. Id. at 77. Complainant argued that this new arrangement was an adverse action since he was now reporting to a lower-level project manager and because he was excluded from section meetings and the section email list. Id. at 77. The ALJ ruled that because Complainant's transfer did not change his pay or interfere with his ability to work, and because Complainant was alerted of any news or events by his project manager, "a reasonable employee would not be dissuaded from whistleblowing based on the transfer and change in reporting structure." Id. at 77-78.

In contrast, the ALJ ruled that Complainant's transfer to an entirely new position was an adverse act. McClendon , slip op. at 80. The ALJ noted that Complainant had previously discussed with management a transfer to another department, however it was in the context of doing the same type of work he had already been enjoying and succeeding in. Id . at 79-80. Complainant had only one day to decide whether to accept the new position and faced placement on the lay-off list if he declined. Id . at 80. In addition, Complainant's workload decreased significantly, and the scope of Complainant's new position "varied unfavorably from the scope of the position when past employees filed it." Id. at 80. Thus, the ALJ ruled that the transfer of Complainant to the new position would dissuade a reasonable employee from engaging in protected activity, and it therefore constituted an adverse act under SOX. Id. at 79-80.

Termination of Employment

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