Everyone knows that the Sarbanes-Oxley Act prohibits retaliation against whistleblowers. It may be less obvious, however, that merely disclosing a whistleblower’s identity can constitute prohibited retaliation. Nevertheless, the Fifth Circuit Court of Appeals recently held exactly that in Halliburton, Inc. v. Administrative Review Board, United States Department of Labor.
In Halliburton, an employee submitted a complaint about the company’s accounting practices through its internal procedures and to the SEC. When the SEC notified Halliburton of its decision to investigate that complaint, the company was able to determine the whistleblower’s identity. An internal email related to the investigation revealed the whistleblower’s identity, after which he was ostracized socially and professionally by his colleagues.
The Administrative Review Board determined that Halliburton was liable to the whistleblower for retaliation. After Halliburton challenged that conclusion, the Court of Appeals upheld the Board’s determination, saying that the “undesirable consequences” of being revealed to one’s colleagues of having accused them of fraud were “obvious.”
The court also rejected Halliburton’s contention that there be a “wrongfully-motivated causal connection” between the whistleblower’s protected conduct and the company’s adverse action. Rather, it is sufficient that the employee prove that his or her protected conduct was a “contributing factor” to the company’s adverse action.
It’s fair to say that most companies would not intentionally retaliate against a whistleblower, particularly in light of Sarbanes-Oxley’s widely known prohibition. It seems quite plausible, however, that a company might inadvertently or innocently reveal the whistleblower’s identity without being aware that such an action could be deemed to be retaliation.
- Any company personnel who might be involved in an internal whistleblower investigation should be informed about this potential pitfall, and
- Consider modifying your whistleblower policy and procedures to specifically prohibit such actions in order to heighten awareness and minimize inadvertent violations.
Doug Harmon heads Parker Poe’s Securities & Corporate Governance Group. With more than 30 years of experience, he represents domestic and international public and private entities in a full array of securities and corporate governance matters.