Does SOX protect whistleblowers who steal confidential information?

Firing a thieving employee could be deemed retaliation.

Firing an employee who steals confidential information, including the Social Security numbers of fellow employees, from the company’s computer system wouldn’t seem to be a risky proposition, particularly if he had signed a confidentiality agreement.  

But in a decision that stunned employment defense lawyers, the Labor Department’s Administrative Review Board (ARB) recently said an employee who took such information to support a whistleblower report may be protected from retaliation under the Sarbanes-Oxley Act (SOX). The ARB reversed an administrative law judge (ALJ) who granted summary judgment on the grounds that the company had legitimate, nonretaliatory reasons for the termination.

Firing Offense

The case involves actions by Matthew Vannoy, a program administrator in Celanese Corp.’s employee expense reimbursement system. In February 2007, he filed an internal complaint asserting that abuse of the company’s reimbursement system and misuse of corporate credit cards posed a financial risk to the company. Shortly thereafter, unbeknownst to the company, he retained an attorney to represent him in submitting information to the IRS Whistleblower Rewards Program. Employees who provide information through the program are eligible to collect up to 30 percent of whatever the IRS collects as a result.

The ARB did acknowledge the tension between a legitimate company confidentiality program and whistleblower bounty programs, such as one recently implemented under the Dodd-Frank Act, that bar companies from enforcing confidentiality agreements to prevent whistleblowers from disclosing information to authorities, Pearlman adds.

But Westman notes that the decision did not focus on another tension inherent in whistleblower bounty programs—the incentive for employees to take confidential information to outside authorities rather than working to resolve the issues internally.

Senior Editor

Mary Swanton

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