Thursday, September 4, 2008

DOL Refuses to Enforce Whistleblower Laws Against Corporate Subsidiaries

Moberly Congratulations to Richard Moberly.  His scholarship on the whistleblowing provisions of Sarbanes-Oxley serves as the basis of a page 3 article in today's Wall Street Journal about how the Department of Labor is routinely dismissing whistleblower complaints filed by employees at coroprate subsidiaries:

The Department of Labor, charged with enforcing the federal law protecting corporate whistleblowers at publicly traded companies, has been dismissing complaints on the technicality that workers at corporate subsidiaries aren't covered.

The government has ruled in favor of whistleblowers 17 times out of 1,273 complaints filed since 2002, according to department records. Another 841 cases have been dismissed. Many of the dismissals were made on the grounds that employees worked for a corporate subsidiary, says Richard Moberly, a University of Nebraska law professor. He studies issues involving workers who face retaliation from employers for reporting wrongdoing, and based his findings on department data. The rest of the cases are either pending, withdrawn or were settled.

Sen. Patrick Leahy, a Vermont Democrat who helped craft the whistleblower provision -- part of the Sarbanes-Oxley corporate governance act -- says the law was meant to cover workers in corporate subsidiaries. "Otherwise, a company that wants to do something shady, could just do it in their subsidiary," he said.

For the entire WSJ article, see Jennifer Levitz, Whistleblowers Are Left Dangling (subscription required).


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