Image of Does the Sarbanes-Oxley whistleblower law authorize front pay?

Does the Sarbanes-Oxley whistleblower law authorize front pay?

Prevailing Sarbanes-Oxley Whistleblowers Can Recover Front Pay

A prevailing SOX whistleblower can recover “all relief necessary to make the employee whole,” including reinstatement, back pay, attorney’s fees, and costs. 18 U.S.C. § 1514A(c). “Special damages” include damages for impairment of reputation, personal humiliation, mental anguish and suffering, and other noneconomic harm resulting from retaliation. See Kalkunte v. DVI Fin. Servs., Inc., ARB Case Nos. 05-139, 05-140, at 11 (ARB Feb. 27, 2009).

Although reinstatement is the preferred and presumptive remedy to make an employee whole, some DOL ALJs and federal judges have awarded front pay in lieu of reinstatement. See, e.g., Hagman v. Washington Mutual Bank, Inc., ALJ Case No. 2005-SOX-00073, at 26–30 (ARB Dec. 19, 2006), appeal dismissed, ARB Case No. 07-039 (ARB May 23, 2007) (awarding $640,000 in front pay to a banker whose supervisor became verbally and physically threatening when the banker disclosed concerns about the short funding of construction loans).

In October 2013, Judge Robert Payne held that front pay is an appropriate remedy in lieu of reinstatement in SOX actions. See Jones v. SouthPeak Interactive Corp., 986 F. Supp. 2d 680 (E.D. Va. 2013), aff’d, 777 F.3d 658 (4th Cir. 2015). Andrea Jones worked at SouthPeak Interactive Corp. (“SouthPeak”) as its chief financial officer, and SouthPeak terminated her employment two days after she disclosed accounting irregularities to the SEC. Following a four-day trial, a jury found for Jones and awarded nearly $700,000 in damages. Jones then filed a motion seeking front pay in lieu of reinstatement and in addition to compensatory damages. Judge Payne’s decision to award front pay under SOX was based on DOL regulations implementing SOX, which authorize the award of front pay in lieu of reinstatement, and on Fourth Circuit precedent affirming awards of front pay in lieu of reinstatement under similar remedial statutes, such as the ADEA and FMLA.

SouthPeak appealed Judge Payne’s decision. The DOL filed an amicus curiae brief arguing that front pay is an appropriate remedy under SOX, and the Fourth Circuit affirmed. See 777 F.3d at 663. Following Jones, other circuits will likely hold that SOX authorizes front pay in lieu of reinstatement.

In Mahony v. KeySpan Corp., No. 04 Civ. 554 (SJ), 2007 WL 805813, at *7 (E.D.N.Y. Mar. 12, 2007), the court held that “[w]When reputational injury caused by an employer’s unlawful discrimination diminishes a plaintiff’s future earnings capacity, [she] cannot be made whole without compensation for the lost future earnings [she] would have received absent the employer’s unlawful activity.”)

Experienced and Effective Sarbanes-Oxley Whistleblower Attorneys

The whistleblower lawyers at Zuckerman Law have substantial experience litigating Sarbanes Oxley whistleblower retaliation claims and have achieved substantial recoveries for officers, executives, accountants, auditors, and other senior professionals.  To learn more about corporate whistleblower protections, see our Sarbanes-Oxley Whistleblower Protection FAQ.  Click here to read client testimonials about the firm’s work in SOX whistleblower matters and other employment-related litigation.

To schedule a free preliminary consultation, click here or call us at 202-262-8959.

Leading whistleblower law firm Zuckerman Law has written extensively about whistleblower protections and is quoted frequently in the media on this topic. A sample of those blog posts and articles appears below:


Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.