S-O-X Protects Only Public Company Whistleblowers, Or Does It?

DOL's View

Thomas Spinner was a CPA whose firm provided accounting and audit services to a public company. Spinner's accounting firm was not publicly-traded. A month after being assigned to audit the pubic company, Spinner was removed and fired. As required by S-O-X, he filed a whistleblower complaint with OSHA alleging that his termination was the result of his reporting internal control problems at the customer. A year later, in February 2010, OSHA concluded that Spinner was S-O-X protected, but he would have been terminated regardless of his report.

Spinner appealed to an ALJ, who granted summary decision to his employer because it was non public and, thus, outside the scope of S-O-X. Spinner pressed on until the DOL Administrative Review Board (ARB) issued its decision, two years later, concluding that Spinner was protected by S-O-X. Spinner v. David Landau and Associates, LLC., ARB Nos. 10-111 and -115. ALJ No. 2010-SOX-29 (ARB May 31, 2012).

The ARB relied on DOL regulations (29 CFR §1980.101) that implemented Section 806(a) of S O-X. First, an employee is "an individual presently or formerly working for a [public] company or company representative." Next, a "company representative" is "any officer, employee, contractor, subcontractor, or agent of a [public] company." DOL's view is that Section 806 [codified as 18 USC 1514A(a)] protects employees of publicly-traded companies as well as the employees of contractors, subcontractors, and agents of those publicly-traded companies.

The First Circuit View

The ARB decision is completely at odds with the First Circuit's February 2012 decision in Lawson v. FMR, 670 F.3d 61. Lawson was—and remains—a case of first impression in the federal courts of appeal. The Lawson plaintiffs were employees of investment advisors servicing publicly-traded mutual funds. The Lawson majority held that only public company employees are S-O-X-protected. The dissenting judge found the statutory language of 18 USC 1514A(a) to be clear: "No...contractor [of a public-traded company]...may discharge...an employee."

Spinner was the third ARB decision to conclude that S-O-X coverage is not limited to public company employees. Spinner did not arise in the First...