Financial Services Employment Law

News, Updates, and Insights for Financial Services Employers

Whistleblowers Under Sarbanes-Oxley and Dodd-Frank – Employment Law This Week

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As we mentioned before the holiday, I was recently interviewed on our firm’s new video program, Employment Law This Week.  The show has now released “bonus footage” from that episode – see below.

I elaborate on my recent post with Jason Kaufman, “2nd Circuit Expands Dodd-Frank Anti-Retaliation Protection to Cover Internal Whistleblowing.”

The U.S. Department of Justice Does Business No Favors By Significantly Delaying Website Accessibility Regulations Until 2018

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Joshua A. Stein

Frustrating news has emerged from Washington D.C. as the recently-published federal government’s Fall Semiannual Regulatory Agenda revealed that the long-anticipated U.S. Department of Justice’s (“DOJ”) Notice of Proposed Rulemaking (“NPRM”) for regulations governing website accessibility for places of public accommodation under Title III of the Americans with Disabilities Act (“Title III”) would not be issued in the Spring of 2016 as most recently anticipated and would instead be delayed until fiscal year 2018.  DOJ now intends to issue a NPRM governing website accessibility for state and local governments under Title II of the ADA in early 2016 and then hopes that that process will create the necessary infrastructure to develop and promulgate similar regulations for entities governed by Title III.

Such news is particularly troubling given the recent surge in website accessibility actions brought against places of public accommodation and business establishments operating exclusively in cyberspace by private plaintiffs, advocacy groups, and regulators at the federal, state, and local levels.  Indeed, notwithstanding DOJ’s latest delay, there is no indication that the federal government intends to cease its quest to have places of public accommodation provide accessible websites.  Relying upon Title III’s overarching civil rights obligations – most importantly that places of public accommodation provide “full and equal enjoyment” of its goods, services, etc. – DOJ continues to seek website accessibility provisions as part of its settlement agreements with a wide variety of places of public accommodation.  DOJ has even gone so far as to file Statements of Interest in private litigations ongoing between both Harvard University and the Massachusetts Institute of Technology and the National Association of the Deaf in the U.S. District Court for Massachusetts opposing their efforts to have the lawsuits dismissed or stayed pending DOJ’s completion of the rulemaking process.  (3:15-CV-30023 (D.Mass) and 3:15-CV-30224 (D.Mass))

The limited number of judicial decisions addressing the applicability of Title III to the websites of places of public accommodation and online businesses do not provide a clear road map for businesses due to the existence of a split body of case law.  The current law falls along three primary lines:  (i) Title III’s application is limited to actual physical places and cannot apply to websites absent an amendment to Title III or the issuance of new regulations; (ii) Title III applies to websites when there is a nexus between a physical place of public accommodation and the goods and services offered on its website; and (iii) Title III applies to even online-only businesses because Title III must be read broadly to promote the ADA’s goal of allowing individuals with disabilities to fully and equally enjoy and participate in society and, therefore, it must evolve to apply to new technologies.  The limited body of case law to date has developed primarily in the preliminary motion to dismiss phase and, therefore, the viability of various potential affirmative defenses or what it means for a website to be accessible has not be sufficiently analyzed by the courts.

Further complicating the landscape, since DOJ announced its previous delay of the regulations (then into April 2016) this past spring, businesses across most industries – including retail, hospitality, financial services, and sports and entertainment – have been deluged with demand letters from industrious plaintiffs’ firms seeking to take advantage of the regulatory uncertainty and limited case law.  Understanding that the costs of litigating a developing area of the law may prove significant and the return uncertain, many businesses are opting to reach amicable resolutions to these matters rather than explore more aggressive litigation positions.  To the extent others hoped that DOJ guidance would soon stem the tide of these demand letters, this most recent development is disheartening news.  Businesses hoping to avoid such letters are best served by taking prophylactic actions to address the accessibility of their websites.

For more on these issues see:


Whistleblower Case Withdrawn from High Court Review – Employment Law This Week

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Employment Law This Week – Epstein Becker Green’s new video program – features an interview with attorney John Fullerton, a founding contributor to this blog.

Mr. Fullerton discusses the lack of clarity on what constitutes a whistleblower. Marketing firm Neo@Ogilvy has decided not to appeal to the U.S. Supreme Court in a case that would have tested the definition of a whistleblower under the Dodd-Frank Act. At issue is whether an employee can be eligible for anti-retaliation protection under the Dodd-Frank Act even if he or she does not provide information of corporate wrongdoing directly to the SEC. The U.S. Court of Appeals for the Fifth Circuit says “no,” but the Second Circuit disagrees.

Click below to view the episode and also see our earlier post “2nd Circuit Expands Dodd-Frank Anti-Retaliation Protection to Cover Internal Whistleblowing.”

October 15: Attend Epstein Becker Green’s Workforce Management Briefing – High Stakes and High Priorities

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34th Annual Workforce Management Briefing Banner

When:  Thursday, October 15, 2015    8:00 a.m. – 3:00 p.m.

Where:  New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

This year, Epstein Becker Green’s Annual Workforce Management Briefing focuses on the latest developments that impact employers nationwide, featuring senior officials from the U.S. Department of Labor and the Equal Employment Opportunity Commission. We will also take a close look at the 25th anniversary of the Americans with Disabilities Act and its growing impact on the workplace.

In addition, we are excited to welcome our keynote speaker Neil Cavuto, Senior Vice President, Managing Editor, and Anchor for both FOX News Channel and FOX Business Network.

Our industry-focused breakout sessions will feature panels composed of Epstein Becker Green attorneys and senior executives from major companies, discussing issues that keep employers awake at night.  From the latest National Labor Relations Board developments to data privacy and security concerns, each workshop will offer insight on how to mitigate risk and avoid costly litigation.

View the full briefing agenda here. Contact Kiirsten Lederer or Elizabeth Gannon for more information and to register.   Seats are limited.

2nd Circuit Expands Dodd-Frank Anti-retaliation Protection To Cover Internal Whistleblowing

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On September 10, 2015, the Second Circuit Court of Appeals ruled in Berman v. Neo@Ogilvy LLC that an employee who reports an alleged securities violation only to his or her employer, and not to the SEC, is nevertheless covered by the anti-retaliation protections afforded by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”).

Berman, a former finance director of Neo@Ogilvy, claimed that his employer and its corporate parent, WPP Group USA, Inc., violated the whistleblower protections of Dodd-Frank by wrongfully terminating him for raising concerns internally about business practices that allegedly constituted accounting fraud.  The companies moved to dismiss the claim, arguing that Berman was not a whistleblower subject to protection under Dodd-Frank because he did not report the alleged violations to the SEC.  The District Court agreed.

In a 2-1 decision, the Second Circuit reversed the District Court’s decision on appeal.  The Court found that the provisions of Dodd-Frank are ambiguous as to whether an employee who reports an alleged violation internally, but not to the SEC, qualifies as a whistleblower.  On the one hand, Section 21F(a)(6) of Dodd-Frank limits the definition of “whistleblower” to include only those individuals who provide information relating to an alleged securities violation to the SEC.  Yet, on the other hand, Section 21F(h)(1)(A) of Dodd-Frank’s retaliation protection provision prohibits retaliation against individuals who make disclosures that are, inter alia, required or protected under the Sarbanes-Oxley Act of 2002 (“SOX”), and SOX protects employees who make internal complaints of suspected securities laws violations without reporting them to outside agencies.

Finding that these were conflicting statutory provisions, the Court deferred to the SEC’s interpretation of the statute, under which an individual is a “whistleblower” if he or she provides information pursuant to Section 21F(h)(1)(A) of Dodd-Frank, which, as explained above, prohibits retaliation against employees for making internal complaints that would be protected by SOX.  Accordingly, the Court held that under SEC Rule 21F-2, “Berman is entitled to pursue Dodd-Frank remedies for alleged retaliation after his report of wrongdoing to his employer, despite not having reported to the Commission before his termination.”

Judge Dennis Jacobs, dissenting, opined that Dodd-Frank is “unambiguous”:  Section 21F(a)(6) is controlling because it defines who is a “whistleblower” under the relevant section of the statute and expressly provides that only those who report to the SEC can qualify.   Judge Jacobs pointed out that Dodd-Frank Section 21F(h)(1)(A), which the majority found creates ambiguity by incorporating protections provided by SOX, does not expand the statutory definition of whistleblower under Dodd-Frank, but instead identifies which acts done by whistleblowers are protected by Dodd-Frank.  In other words, according to Judge Jacobs, Section 21F(h)(1)(A) does not apply to protect a person unless he or she qualifies as a “whistleblower,” as the term is defined by Section 21F(a)(6).  Judge Jacobs criticized the majority for disregarding the plain text of Dodd-Frank’s definition of whistleblower and creating an ambiguity in the statute that does not exist solely to expand the reach of the anti-retaliation provisions of Dodd-Frank.

Notably, the Second Circuit’s decision creates a split in authority with the Fifth Circuit Court of Appeals, which came down the opposite way when faced with the same issue in 2013.  As a result, this issue is almost surely headed to the Supreme Court for resolution. Further, in holding that Dodd-Frank provides a private right of action for those who report violations only internally, the Second Circuit’s decision may lead to significantly more whistleblower retaliation claims in the future because, in comparison to the SOX whistleblower protections, Dodd-Frank offers a much longer statute of limitations, double back pay damages, and no administrative exhaustion requirement.

Epstein Becker Green’s Wage and Hour App Now Includes All 50 States and More

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Wage & Hour Guide for Employers AppWe’d like to share some news with financial services industry employers: Epstein Becker Green has released a new version of its Wage & Hour Guide for Employers app, available without charge for Apple, Android, and BlackBerry devices.

Following is from our colleague Michael Kun, co-creator of the app and leader of our Wage and Hour group:

We have just updated the app, and the update is a significant one.

While the app originally included summaries of federal wage-hour laws and those for several states and the District of Columbia, the app now includes wage-hour summaries for all 50 states, as well as D.C. and Puerto Rico.

Now, more than ever, we can say that the app truly makes nationwide wage-hour information available in seconds. At a time when wage-hour litigation and agency investigations are at an all-time high, we believe the app offers an invaluable resource for employers, human resources personnel, and in-house counsel.

Key features of the updated app include:

  • New summaries of wage and hour laws and regulations are included, including 53 jurisdictions (federal, all 50 states, the District of Columbia, and Puerto Rico)
  • Available without charge for iPhoneiPad, Android, and BlackBerry devices
  • Direct feeds of EBG’s Wage & Hour Defense Blog and @ebglaw on Twitter
  • Easy sharing of content via email and social media
  • Rich media library of publications from EBG’s Wage and Hour practice
  • Expanded directory of EBG’s Wage and Hour attorneys

If you haven’t done so already, we hope you will download the free app soon.  To do so, you can use these links for iPhoneiPad, Android, and BlackBerry.

SEC Issues Interpretation of its Regulations on Definition of Dodd-Frank Whistleblower

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On August 4, 2015, the SEC issued an “Interpretation of the SEC’s Whistleblower Rules Under Section 21F of the Securities Exchange Act of 1934.” (pdf).  Unsurprisingly, and consistent with the position that it has been taking in amicus briefs on the issue, the SEC states that a whistleblower need not report suspected wrongdoing to the Commission in order to be protected by the anti-retaliation provisions of Dodd-Frank.  Rather, internal whistleblowing that is protected under the Sarbanes-Oxley Act is protected activity sufficient to state a claim under Dodd-Frank, according to the SEC.  We recently posted a video discussion of this very topic (here), noting that there is currently a sharp split of judicial authority on this critical question, and that the issue may well be headed to the Supreme Court for resolution.  The Fifth Circuit held in Asadi v. G.E. Energy (USA), LLC, 720 F.3d 620 (5th Cir. 2013), that a Dodd-Frank whistleblower must report wrongdoing to the Commission to be protected by that statute; a decision from the Second Circuit on the issue is pending in Berman v. Neo@Ogilvy LLC, 14-4626 (2d Cir.).  Ultimately, of course, it is the job of the courts to determine what Congress intended in the Dodd-Frank Act, but if the issue does indeed reach the Supreme Court – and in every federal district and appellate court case until that time – those favoring a broad interpretation of the definition of a “whistleblower” under the Dodd-Frank anti-retaliation provision will surely be citing the SEC’s new interpretation of its regulations.


Regulators Issue Final Dodd-Frank Standards for Assessing Diversity Policies and Practices of Covered Entities in the Financial Services Industry

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On June 10, 2015, the much-anticipated joint final standards (“Final Standards”) issued by six federal agencies (“Agencies”) in accordance with Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Act”) for assessing the diversity policies and practices of the entities that they regulate (“Covered Entities”) were published and became effective.   Covered Entities include financial institutions, investment banking firms, mortgage banking firms, asset management firms, brokers, dealers, financial services entities, underwriters, accountants, investment consultants, and providers of legal services.  In issuing the Final Standards, the Agencies stated that their goal is to provide a framework for an entity “to create and strengthen its diversity policies and practices . . . and to promote transparency of organizational diversity and inclusion.”

My colleagues Lauri Rasnick and Dean Singewald have written an Act Now Advisory describing the Final Standards and explaining important steps financial services employers should take now.

Read the full Act Now Advisory here.

How Should Employers Revise Confidentiality Agreements to Comply with SEC Rule 21F-17(a)? (Video)

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On April 1, 2015, the SEC issued its first-ever enforcement action against a company for using overly restrictive language in one of its confidentiality agreements in violation of SEC Rule 21F-17(a).  We posted previously regarding the settlement order between the SEC and KBR, Inc.  In that Order, KBR, Inc., agreed to include the following language in its confidentiality agreements:

“Nothing in this Confidentiality Statement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of the Law Department to make any such reports or disclosures and I am not required to notify the company that I have made such reports or disclosures.”

In the following video clip from a recent webinar, I discuss this whistleblower carve-out language and whether it should be included in all confidentiality agreements:

Scope of Dodd-Frank Whistleblower Anti-Retaliation Provision Remains Critical, Open Question (Video)

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Can an employee who blows the whistle on alleged securities law violations within the company (and is therefore protected by the anti-retaliation provision of the Sarbanes-Oxley Act), but does not blow the whistle externally to the SEC, also invoke the more advantageous anti-retaliation protections of the Dodd-Frank Act in a private lawsuit?  Or is Dodd-Frank limited to protecting external whistelblowers? There is a growing split of authority on this question among various federal appellate and district courts.  On June 17, 2015, the Second Circuit heard oral arguments on this issue in Berman v. Neo@Ogilvy LLC, 14-4626 (2d Cir.); a decision should be forthcoming this year that may or may not deepen the divide.

In the following video clip from a recent webinar, I discuss the split of judicial authority on this issue, the reasons behind it and what is ultimately at stake:

See more of my videos here.