News Summary
The days when a company could dismiss an employee's grousing over corporate practices are long gone.
Scrambling to respond to the requirements of the Sarbanes-Oxley Act, human resources directors at L.A. public companies are designing new corporate handbooks, holding employee briefings and going over reporting procedures with their attorneys.
Initially the subject of intense study for its impact on accounting procedures, the legislation, signed into law last year, offers extended protections for whistleblowers and may encourage costly retaliation lawsuits if not properly managed. The provisions related to whistleblowers become effective April 26.
Under the new provisions, employers cannot "retaliate" against an employee if he or she discloses a violation of state or federal statute to a government or law agency.
Paul Murphy, who represented Global Crossing Ltd. whistleblower Roy L. Olofson, a former finance vice president, said the greater protections in Sarbanes-Oxley should make employees less afraid to approach their superiors about financial complaints.
Under California's law, whistleblowers must report wrongdoing to a government entity, rather than their managers, and they are more likely to lose their jobs if they speak up, Murphy said.
"Quite frankly, it's hard on the employee," he said. "For every case I've taken, there's five or 10 I've turned down or the client didn't go forward. That's because most of the time, they have not been terminated but believe they will be. I tell them if you go down this road, you will be terminated and it will be very difficult to get a job while this is pending."
Under Sarbanes-Oxley, whistleblowers who succeed in proving they were dismissed in retaliation for their actions must be offered their old jobs, Murphy said.
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