The Occupational Health and Safety Administration (“OSHA”) levied a hefty penalty on Wells Fargo on September 1, 2022, for its violation of the Sarbanes-Oxley Act (“SOX”). OSHA found that the company unlawfully retaliated against an internal whistleblower who raised concerns that the bank was engaged in illegal practices. The agency ordered Wells Fargo to pay the whistleblower more than $22 million in damages, including back pay, front pay, interest, lost bonuses and benefits, and compensatory damages.
The anti-retaliation provision of SOX, 18 U.S.C. § 1514A, makes it illegal for publicly traded companies to retaliate against employees for raising concerns that a company’s conduct violates SOX, including its bans on mail fraud (Section 1341), wire fraud (Section 1343), bank fraud (Section 1344), and securities fraud (Section 1348); “any rule or regulation of the Securities and Exchange Commission;” or “any provision of Federal law relating to fraud against shareholders.” 18 U.S.C. § 1514A(a)(1). Importantly, SOX protects whistleblowers from retaliation for raising both internal and external complaints. Id.
A senior manager in Wells Fargo’s commercial banking unit, based in Chicago, escalated concerns to managers and the company’s ethics hotline that Wells Fargo was violating various financial laws by engaging in price fixing, interest rate collusion, and the falsification of customer information. Wells Fargo fired the employee in 2019 without providing a reason, but eventually backtracked and claimed that the termination was part of an internal reorganization. OSHA found the company’s reasoning unpersuasive and the employee’s termination inconsistent with other employees who were laid off during the restructuring.
Wells Fargo announced its plans to appeal OSHA’s determination, which would bring the case in front of an Administrative Law Judge (“ALJ”) for a hearing. See 29 C.F.R. § 1980.106. A party has thirty days after the preliminary order to appeal to an ALJ. Id. After the ALJ renders a decision, either party can appeal to the Department of Labor’s Administrative Review Board, and, later, to federal court. Id. § 1980.110(a).
Wells Fargo regularly finds itself subject to the scrutiny of federal regulators. In 2017, OSHA ordered Wells Fargo to pay $5.4 million to a former employee for a retaliatory termination, at the time the agency’s largest ever individual whistleblower award. That fired employee, who worked in the wealth management group, similarly reported company fraud to internal managers and Wells Fargo’s ethics hotline and, OSHA found, was fired because of it. OSHA also ordered Wells Fargo to reinstate the employee seven years after his firing in 2010. These remedies were the product of a six-year investigation into the Wells Fargo whistleblower’s initial complaint, which was filed in 2011.
A review of recent OSHA whistleblower awards highlights the extraordinary magnitude of this latest $22 million order. In the past six years, the next highest OSHA award for an individual whistleblower was $958,000, ordered against a company for its retaliation toward a former employee who reported safety concerns. The next highest award overall in that same timeframe came from a federal judge, who ordered a company to pay two former employees $1.04 million for firing them for their participation in an OSHA safety investigation.