The Department of Labor Administrative Review Board’s decision in Dietz v. Cypress Semiconductor Corp., establishes important precedent on the broad scope of protected whistleblowing under the whistleblower provision of the Sarbanes-Oxley Act and clarifies the standard for proving constructive discharge.
Dietz’s SOX Whistleblower Case
Dietz brought suit under the SOX whistleblower law, alleging that Cypress constructively discharged him in retaliation for disclosing to James Nulty, a Senior Vice President at Cypress, that the company’s bonus plan violated state laws. The bonus plan forced Cypress employees to gamble their own money for the possibility of a bonus, calculated in a fashion that was unpredictable to the average employee. Dietz also raised concerns that Cypress failed to inform certain employees that its bonus plan took compulsory deductions from their base salary.
After Dietz raised these concerns, Cypress began undermining Dietz’s ability to perform his job. In particular, management took resources away from the project Dietz was supervising, without his knowledge or approval and in violation of the company’s own policies. In addition, management sent a memorandum to Dietz demanding that he “formally document [his] performance issues,” and warning him that the memo would be “placed in his personnel file to serve as the basis for ‘further’ discipline.”