OSHA has ordered Clean Diesel Technologies Inc. (CDTI) to pay $1.9 million to its former chief financial officer (CFO) who was fired for reporting behavior the former CFO believed to be unethical.
OSHA’s investigation found that the company violated the whistleblower provisions of the Sarbanes-Oxley Act when it wrongfully terminated the former CFO for warning the board of directors about ethical and financial concerns raised by a proposed merger.
“OSHA plays a key role in protecting the integrity of the financial markets and the economy,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “We protect those who are courageous enough to speak out, even internally, about violations of securities rules and regulations.”
In late March 2010, the former CFO provided information to the company’s board of directors based on a reasonable belief there was a conflict of interest involving the chair of CDTI’s board of directors. The former CFO believed that a proposed merger was detrimental to the company, that critical financial information had been withheld from board members, and that the conflict of interest violated internal company controls mandated by the Securities and Exchange Commission (SEC) as well as the company’s own corporate code of ethics. After being terminated from employment in April 2010, the former CFO filed a whistleblower complaint with OSHA one week later. OSHA’s investigation found merit to the complaint.
As a result, OSHA has ordered CDTI a manufacturer and distributor of emission control systems based in Ventura, Calif., formerly headquartered in Stamford, Conn., to pay the complainant more than $486,000 in lost wages, bonuses, stock options and severance pay. In addition, the company must also pay the complainant more than $1.4 million in compensatory damages for pain and suffering, damage to career and professional reputation and lost 401(k) employer matches and expenses.
The order also directs the company to post OSHA’s findings in an 8-K submission to the SEC since previous filings about the complainant’s termination and whistleblower activity had also been posted to the SEC.
The company must also expunge all files and computerized data systems of disciplinary actions related to the complainant’s termination, pay reasonable attorney’s fees and post the order and a notice to workers at all company locations and on its internal website. In addition, OSHA will inform the SEC of its findings so that it can pursue any other appropriate action. CDTI and the complainant each have 30 days from receipt of the findings to file an appeal with the department's Office of Administrative Law Judges.