What is a SOX Complaint?

Do you work for a publicly traded company?

Did you witness some practices by your employer that violates business ethics or regulations?

You might be eligible to make a complaint and be protected from losing your job or facing other types of retaliation at work.

What is Sarbanes-Oxley (SOX)?

Sarbanes-Oxley (SOX) is a federal law that was enacted in 2002 in response to corporate accounting scandals at companies like Enron and WorldCom. SOX aims to protect investors by increasing the accuracy and reliability of financial reporting by publicly traded companies. One important aspect of SOX is the protection it provides to whistleblowers, who are employees who report illegal or unethical behavior within their company.

How does SOX protect whistleblowers?

Under SOX, employees who report misconduct or violations of the law can sue their employer if they are retaliated against or terminated as a result of their reporting. This means that if an employee is fired or otherwise punished for reporting misconduct, they may be able to sue their employer for damages.

To successfully sue for termination under SOX, the employee must be able to show that:

  1. They engaged in protected activity, such as reporting misconduct or violations of the law.
  2. They suffered an adverse employment action, such as being fired or demoted.
  3. There is a causal connection between the protected activity and the adverse employment action. In other words, the employee must be able to show that their reporting of misconduct was a significant factor in their termination.

If the employee can prove these elements, they may be entitled to damages, including back pay, front pay (if the employee is unable to return to work), and attorney’s fees. In some cases, the employee may also be able to seek reinstatement to their former position.

In practice, it is challenging to demonstrate element no. 1 and when it took place.  The reporting of misconduct covered by SOX can require a viewpoint of a lawyer and an investor.  After all, what if the misconduct would not affect investors or share prices?   What if the reporting of misconduct was not made to the right persons or entity?

Examples of activities protected by SOX

An employer covered under SOX may not
discharge or in any manner retaliate against an
employee because he or she:

  •  provided information
  •  caused information to be provided, or
  • assisted in an investigation by
  • a federal regulatory or law enforcement
  •  a Member or committee of Congress, or
  • an internal investigation by the company relating to alleged mail fraud, wire fraud, bank fraud, securities fraud, violation(s)  of SEC rules and regulations, or violation(s)
    of Federal law relating to fraud against shareholders

Limitations for SOX

It is important to note that SOX protections are limited to employees of publicly traded companies, and do not apply to employees of private companies or non-profit organizations. Additionally, SOX does not protect employees who engage in misconduct themselves, or who report misconduct that they know to be false.

What is the deadline for filing a SOX complaint?

Complaints must be filed within 180 days of the alleged discrimination or of when the employee
learned of the alleged discrimination.  Do you want to learn more about the deadlines? Take a look at OSHA FACTSHEET SOX ACT

If you believe you have been terminated in violation of SOX, it is important to seek the advice of an experienced employment lawyer. An attorney can help you understand your rights and options and can represent you in court if necessary.

If you want to file a charge on your own or want to see what a SOX charge looks like, visit OSHA’s online portal for filing a SOX complaint online.