Barran Liebman Alert: Department of Labor Affirms that Disclosing the Identity of a Whistleblower can be Costly for Employers

On March 15, 2013, the Department of Labor's Administrative Review Board ("DOL") reminded employers about the costly consequences of identifying a whistleblower when it affirmed a $30,000 award against Halliburton, Inc.

In Menendez v. Halliburton Inc., the complainant had raised concerns about accounting practices with company personnel and company auditors. In addition, he confidentially filed a complaint with the Securities and Exchange Commission (SEC). During the course of the SEC's investigation of Halliburton, the company's General Counsel identified the complainant as the whistleblower in email communications to the complainant's workgroup.

The complainant accordingly filed a whistleblower complaint under the Sarbanes-Oxley Act of 2002, claiming that he had been retaliated against because his identity had been disclosed to coworkers by Halliburton's General Counsel. Following several administrative decisions and appeals, the DOL concluded that the complainant was entitled to damages because Halliburton had failed to show by clear and convincing evidence that it would have disclosed the complainant's identity as the whistleblower absent protected activity. That is, the DOL found that Halliburton had retaliated against the complainant when it disclosed his identity to coworkers because Halliburton could not establish that it would have disclosed his name if he had not engaged in the protected activity of filing a complaint with the SEC.

Following the DOL's decision, employers should be especially mindful to train employees who will be privy to the details of whistleblower complaints under Sarbanes-Oxley that the identities of any whistleblowers must be kept in strict confidence. Employers should also be aware that Section 301 of that law requires that publicly-traded companies establish procedures for "the confidential, anonymous submission by employees" of concerns about "questionable accounting or auditing matters."

You can read a copy of the opinion of the Administrative Review Board here.

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Electronic Alerts are written by Barran Liebman attorneys for their clients and friends. Alerts are not intended as legal advice, but as employment law, labor law, and employee benefits announcements.

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