Monthly Archives: September 2014

SEC Gives $300,000 Whistleblower Award to Audit and Compliance Employee

By | Employment Law | No Comments

Last week the SEC announced that, for the first time, it had made a whistleblower award to an employee who performs audit and compliance functions at a company. As the SEC noted in its order in the case, although its regulations generally preclude whistleblower awards to employees whose principal duties involve compliance or internal audit responsibilities, there is an exception to this rule where the employee first reports the alleged violation internally and then waits at least 120 days before contacting the SEC. See 17 CFR § 240.21F-4(b)(iii)(B); 17 CFR § 240.21F-4(b)(v)(C). That is what happened in this case. According to the SEC, the whistleblowing employee reported concerns about wrongdoing to appropriate personnel within the company, including a supervisor. But when the company took no action within 120 days, the employee reported the same information to the SEC. The SEC awarded the employee $300,000, 20% of the $1.5 million monetary sanctions it collected from the employer.

As we discussed in a previous post, the SEC’s whistleblower program offers monetary awards to eligible individuals who come forward with original information that leads to a Commission enforcement action in which over $1 million in sanctions is ordered. The whistleblower awards range between 10% and 30% of the money collected. The program provides a powerful incentive for company employees to give tips to the SEC about potential violations of the federal securities laws.

Since audit and compliance employees are responsible for ferreting out information about corporate wrongdoing, they are particularly well-positioned to profit from the whistleblower program. Companies confronted with allegations of wrongdoing from an audit and compliance employee should act promptly to investigate and take any necessary follow-up action. The SEC has commented that the 120-day period between the employee’s internal report and the report to the SEC is not intended to be a “grace period” during which a company may determine its response to any violations, and a company’s promptness in self-reporting misconduct is an important factor for the SEC in considering whether and to what extent it will grant leniency. See SEC Release No. 34-64545, Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934 (Aug. 12, 2011), at 76. Moreover, an audit and compliance employee need not always wait 120 days after an internal report to qualify for a whistleblower award. The employee can go directly to the SEC if he or she has a reasonable basis to believe that disclosure of the information to the Commission is necessary to prevent a company from engaging in conduct likely to cause substantial financial injury or conduct that will impede an investigation. See 17 CFR § 240.21F-4(b)(v)(A) & (B). Similar provisions apply to other persons who are responsible for monitoring and/or investigating corporate compliance, including officers, directors, and auditors in certain circumstances. See 17 CFR § 240.21F-4(b)(iii) & (v). The SEC’s whistleblower program is a powerful enforcement tool that makes it more important than ever for corporate personnel to be proactive in responding to internal allegations of wrongdoing.

Five MORE Illegal Firings in an Employment At-Will State Like Kentucky

By | Civil Rights, Employment Law | No Comments

Last week, we talked about seven ways it’s illegal to be fired in an at-will employment state like Kentucky. For the most part, you can be fired for any reason the employer feels like. Maybe she doesn’t like your car, or you were falsely accused of stealing and later proved innocent. But you cannot be fired or not hired on the basis of “The Big Seven:” race, age, gender, nation of origin, disability, religion, or pregnancy.

In addition to those seven, there are five other ways it’s illegal to be fired in Kentucky.

1. Retaliation

This is usually a separate legal claim in part of an employment law case. If an employee makes a complaint about discrimination or violation on any of The Big Seven, that complaint gives them legal protection from retaliation. This means if they file a complaint with a government agency like the Equal Employment Opportunity Commission, they have protection from retaliation. If later that company fires the employee in retaliation for making the complaint, that will give them a separate cause of action or a separate legal claim.

I had a case that is now going to the Supreme Court that involved retaliation. My client was a track coach at a university. She went to her HR department and filed a gender discrimination complaint against the athletic department, claiming the department treated male coaches better than female coaches. Three weeks later she was fired. We took the case to a jury with two legal claims:

  1. She was subjected to harassment based on gender, which was a hostile work environment claim.
  2. She was fired in retaliation for making that complaint.

In the end, the first claim was not awarded, but she won the second one because the jury found that she was indeed fired in retaliation for making her complaint.

2. Whistleblower Statute

Whistle blowerThe Kentucky Whistleblower statute, also known as KRS 61, states that it is illegal to fire an employee who makes a complaint to a government agency for wrongdoing or illegal activity. There is a limitation on this statute in that it only applies to government employers, state employers, or employers that receive federal or state government funding. This means contractors to the federal or state government are covered by this statute, but a company that doesn’t do business with the government is exempt.

3. Worker’s Comp Claim

An employer cannot fire an employee because they got hurt on the job and filed a worker’s comp claim. Companies don’t like worker’s comp because it increases their insurance premiums, and some have eliminated an employee to keep those costs down. If an employee files a claim and the company fires them as a result, this is considered retaliation and is, therefore, illegal.

4. Wage and Hour Complaint

It is illegal to fire an employee who makes a claim that they are not getting paid properly. This could be lack of vacation pay, failure to pay bonuses, or improper pay. This would be a retaliatory discharge and also illegal.

5. Failure to Accommodate an Employee’s Disability

A disability is defined as substantially limited in their ability to perform one or more of the major life activities, but otherwise able to do the job. If a person with a disability makes a request for accommodation, the employer has to make a reasonable effort to meet it. This may include modified job duties, a hearing aid, or a wheelchair. If they refuse, that’s considered failure to accommodate. If the employer agrees to the accommodation, but refuses to pay for it, that could also be considered failure to accommodate.

There are several reasons as to why a firing can be illegal in an at-will employment state like Kentucky. They’re not very common, but they do come up many times throughout the state. If you think you’ve been illegally fired from a job, or not hired, because of The Big Seven, or any of these reasons, contact an employment law attorney to see if you have a case.

Photo credit: Leo Reynolds (Flickr, Creative Commons)

EEOC Issues New Guide to Help Federal Agencies Advise Workers on Their Rights

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Report Suggests Different Ways Agencies Can Provide EEO Information to Their Employees and Applicants

WASHINGTON – The U.S. Equal Employment Opportunity Commission (EEOC) today released a new guide to help the federal government educate its employees on how to protect their rights to be free from employment discrimination.

The report, A Practical Guide to Providing Employees with Adequate Information about Their Rights under Federal Equal Employment Opportunity (EEO) Laws and Regulations, provides federal agencies various communication methods to ensure their employees and applicants for employment are fully aware of their rights under the equal employment opportunity laws and regulations.

As one of the many efforts to preserve access to the legal system under the EEOC’s Strategic Enforcement Plan / Federal Sector Complement Plan, the EEOC reached out to federal agencies, compiled their communication methods and has now issued this guide to share those methods with all federal agencies. The EEOC encourages agencies to utilize multiple communication methods, including electronic methods whenever possible.

The EEOC is charged with monitoring federal agency compliance with equal employment opportunity laws and procedures. It reviews and assesses the effect of agencies’ compliance with requirements to maintain affirmative employment programs to promote equal employment opportunity, and to identify and eliminate barriers to equality of employment opportunity.

The EEOC enforces laws prohibiting discrimination in the federal and private sectors. Further information about the EEOC is available on its web site at

LinkedIn Pays Nearly $6 Million After US Labor Department Investigation

By | Employment Law | No Comments

After being investigated by the US Labor Department for violations of the Fair Labor Standards Act, LinkedIn has been forced to pay out nearly $6 million in damages and unpaid overtime to 359 employees. The investigation revealed violations of the overtime and record-keeping parts of the Fair Labor Standards Act, affecting employees in California, Illinois, Nebraska and New York. As part of the penalties handed to LinkedIn, the company also agreed to take steps within its company to prevent further violations from occurring. The full extent of the violations included a failure to record and pay for all hours employees were working in a given week. Going forward, LinkedIn will operate under a compliance agreement with the US Labor Department that ensures the company will provide compliance training and make sure all non-exempt employees have copies of LinkedIn’s overtime work policy. The company will also meet with managers of employees that have been affected by the violations and hand out reminders to give payment for all overtime work. Furthermore, the company will remind employees that LinkedIn has a policy that prohibits any retaliation for employees acting as whistleblowers. These types of violations are surprisingly common in workplaces of all types across the country, but many employees either feel that these standards are normal or are simply afraid of tipping off authorities about overtime violations. If you face a scenario like this in your workplace, it’s important that you speak with a whistleblower attorney as soon as possible to ensure that the company will follow labor laws. Whistleblowers are protected under the SEC and could be eligible to receive settlement money in their case.