Which of the following is one way the Sarbanes-Oxley Act protects employees who report organizational misconduct?

• A. It allows companies to terminate employees without cause.
• B. It prohibits employers from retaliating against whistleblowers.
• C. It exempts small businesses from all reporting requirements.
• D. It requires employees to report misconduct directly to shareholders.

Answer: (B)

Verified step by step guidance

1. Understand the Sarbanes-Oxley Act (SOX): The Sarbanes-Oxley Act was enacted in 2002 to improve corporate governance and accountability. It includes provisions to protect whistleblowers who report organizational misconduct.
2. Focus on the whistleblower protection aspect: SOX prohibits employers from retaliating against employees who report fraudulent activities or violations of securities laws. This protection ensures employees can report misconduct without fear of losing their jobs or facing other forms of retaliation.
3. Eliminate incorrect options: Review the provided choices and identify which ones do not align with the provisions of SOX. For example, SOX does not allow companies to terminate employees without cause, nor does it exempt small businesses from all reporting requirements.
4. Analyze the correct option: The correct answer is that SOX prohibits employers from retaliating against whistleblowers. This aligns with the Act's goal of encouraging transparency and ethical behavior in organizations.
5. Conclude the reasoning: By understanding the purpose and provisions of SOX, it becomes clear that the Act is designed to protect employees who report misconduct, ensuring they are not penalized for doing the right thing.