SC Johnson in hot water as whistle-blower’s suits get approval

A former SC Johnson & Son employee said he was fired by the company after reporting tax fraud allegations to federal officials in 2008. Under the Sarbanes-Oxley Act, it is a felony offense to take any retaliatory action against a whistle-blower on corporate fraud.

In December 2000 the man uncovered nearly $5 million in tax credits that SC Johnson had unduly obtained and he believes the company may have received up to $11 million in reduced tax liability. He also says he witnessed document falsification and destruction as recently as 2005.  Stay-tuned for further updates as this case progresses.

During this time the former employee was directed to not report his findings, and was even told by a company tax counsel “This is why I go to church on Sunday,” a reference to committing potentially criminal acts. The former employee later announced he was going to file a whistle-blower complaint to the Department of Labor as the same tax counsel had created a hostile working environment and may have given the man a negative performance review in retaliation for reporting the findings.

The former employee was allegedly offered multiple packages by SC Johnson to cover up the information. He alleges that he was offered a pay raise by the company if he signed a claims and confidentiality agreement, and then later was offered a full-year’s salary if he resigned and entered into a similar agreement.

Instead, the company placed him on administrative leave and fired him. SC Johnson sued the man in a Wisconsin Court, citing breach of contract and seeking the recovery of documents and property.

The court ruled in favor of SC Johnson, but the former employee appealed the ruling and also filed a federal countersuit claiming that the company’s fraud and his ultimate firing were linked and a violation of the Racketeer Influenced and Corrupt Organizations Act.

That appeal was upheld by a panel of three judges, allowing the retaliation, tax fraud and federal countersuit to move forward. It is an important decision that supports the RICO and Sarbanes-Oxley acts, which are valuable laws that protect employees from the lengths companies will go to in order to protect their own interests.

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Alan Olson writes this web-log to provide helpful information regarding employment cases. He practices employment law throughout the United States from his offices in New Berlin, Wisconsin. Attorney Olson may be contacted at [email protected] with questions about the information posted here or for advice on specific employment claims.

Source: Courthouse News Service, “New Life to Retaliation Suit Against SC Johnson,” Joe Celentino, Dec. 21, 2011

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