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SOX Does Not Protect Employee Leaks to the Media

    Client Alerts
  • May 27, 2011

The Sarbanes-Oxley Act (SOX) prohibits publically-held employers from retaliating against employees who make certain complaints regarding financial misconduct to company officials or government agencies. Last week, the Ninth Circuit Court of Appeals said that SOX does not extend protections to employees who provide allegations of such misconduct to the media.

In Tides v. Boeing Co., the plaintiffs were internal auditors who provided a newspaper reporter information regarding alleged pressure from Boeing management to change their audit results. After being terminated, they filed suit under SOX, alleging that the action was protected because it could have resulted in such information being provided to government agencies.

The Ninth Circuit rejected the claim, pointing to the plain language of the Act. SOX clearly states what complaints are protected. Under the plaintiffs' theory, virtually any disclosure of alleged misconduct to any person could be protected, because it could eventually be made known to regulatory agencies. Had Congress intended media exposure to be included in SOX, it could have written it into the law.