OSHA has ordered Clean Diesel Technologies Inc. to pay $1.9 million to its former chief financial officer who was fired for reporting conduct he believed was detrimental to the company’s shareholders. 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.
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, critical financial information had been withheld from board members, and the conflict of interest violated internal company controls mandated by the Securities and Exchange Commission as well as the company’s own corporate code of ethics. After being terminated from employment in April 2010, the he filed a whistleblower complaint with OSHA one week later.
“This order should send a clear message to publicly traded companies that silencing those who try to do the right thing is unacceptable,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels.
OSHA’s investigation found merit to the complaint. On September 30, 2013 OSHA announced that it had ordered CDTI to pay the former CFO more than $486,000 in lost wages, bonuses, stock options and severance pay. The company must also pay him over $1.4 million in compensatory damages for pain and suffering, damage to career and professional reputation and lost 401(k) employer matches and expenses.
CDTI must 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.
OSHA also ordered CDTI to expunge all files and computerized data systems of disciplinary actions related to the former CFO’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.
OSHA will also inform the SEC of its findings so that it can pursue any other appropriate action. CDTI and the former CFO each have 30 days to file an appeal with the department’s Office of Administrative Law Judges.