Administrative Review Board Decisions

The following case summaries were created by the Administrative Review Board staff.

Duggan v. FreedomRoads LLC, ARB No. 2026-0048, ALJ No. 2026-CFP-00002 (ARB June 29, 2026) (Order Remanding Case to Administrative Law Judge to Resolve Pending Motion for Reconsideration)

TIME IN WHICH TO APPEAL; RECONSIDERATION

In Duggan v. FreedomRoads, LLC, ARB No. 2026-0048, ALJ No. 2026-CFP-00002 (ARB May 29, 2026), the ARB remanded the case to the ALJ to permit him to rule on a pending motion for reconsideration. The case was before the ARB for a second time after the ARB had previously remanded the case to the ALJ to permit him to rule on a pending motion for reconsideration. After the case was remanded, the ALJ's chambers informed Complainant that a paper-mailed filing of his petition for review filed with the ARB would not be accepted as the ALJ had already received an electronically filed copy of the same document. The Complainant interpreted this email as a final order disposing of his motion for reconsideration and again sought ARB review. Since Complainant's filing of this petition for review deprived the ALJ of jurisdiction over the case, the ARB remanded the case to the ALJ, finding that the interest of judicial economy would be best served by allowing the ALJ to rule on Complainant's motion for reconsideration.

Gloss v. Tata Chemicals North America, ARB No. 2024-0006, ALJ No. 2020-CAA-00008 (ARB June 26, 2026) (Decision and Order Affirming in Part, Reversing in Part, and Remanding)

SOX COVERAGE; SOX-PROTECTED ACTIVITY; CAA CLAIM TIMELINESS; EQUITABLE MODIFICATION; HOSTILE WORK ENVIRONMENT

In Gloss v. Tata Chemicals North America, ARB No. 2024-0006, ALJ No. 2020-CAA-00008 (ARB June 26, 2026), Complainant appealed the ALJ's partial summary decision, which held that: (1) Respondent was not an entity subject to the anti-retaliation provisions of the Sarbanes-Oxley Act of 2002 (SOX) because it was not an affiliate whose financial information was included in a public company's consolidated financial statements; (2) Complainant had not engaged in protected activity under SOX; (3) Complainant's Clean Air Act (CAA) claims of bonus reduction, hostile work environment, and retaliatory termination were untimely; (4) equitable modification did not apply; and (5) Complainant did not suffer a hostile work environment as a matter of law. Complainant also appealed the ALJ's post-hearing decision denying the complaint, in which the ALJ held that: (1) equitable modification of the deadline to file Complainant's CAA retaliatory termination claim was unwarranted; (2) Respondent's denial of severance was not an adverse action; and (3) Complainant had not engaged in protected activity under the CAA.

SOX COVERAGE; RESPONDENT COVERED AFFILIATE OF PUBLICLY TRADED COMPANY; RESPONDENT'S FINANCIAL INFORMATION INCLUDED IN CONSOLIDATED FINANCIAL STATEMENTS OF PUBLICLY TRADED COMPANY

On the question of coverage, the ARB noted that Section 929A of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amended SOX to expressly extend coverage to subsidiaries and affiliates by adding: "including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company."

Respondent is a private company, not publicly traded under Section 12 and not required to file under Section 15(d) of the Exchange Act. The ARB considered whether Respondent was covered by SOX through its relationship with Owens-Illinois, a publicly traded company. During Complainant's employment in 2018 and 2019, Respondent owned 75% of Tata Chemicals (Soda Ash) Partners Holdings (TCSAP Holdings), while Owens-Illinois, through a wholly owned subsidiary, owned the remaining 25%. TCSAP Holdings in turn owned 99% of Tata Chemicals (Soda Ash) Partnership (TCSAP). The ARB analyzed whether Respondent was an affiliate of Owens-Illinois through this shared ownership structure. While prior ARB decisions had addressed subsidiary coverage, affiliate coverage was an issue of first impression.

The ARB evaluated which definitions of "affiliate" and "control" applied under the whistleblower protection provision of the SOX. It noted that neither SOX nor Section 929A of the Dodd-Frank Act specifies the applicable definitions for "subsidiary" or "affiliate." The ARB then observed: the general definitions portion of Dodd-Frank at Section 2 states that "[t]he term ‘affiliate' has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)"; the Federal Deposit Insurance Act at 12 U.S.C. § 1813(w)(6) routes to the Bank Holding Company Act's definition of "affiliate" at 12 U.S.C. § 1841(k) ("the term ‘affiliate' means any company that controls, is controlled by, or is under common control with another company").

The ARB noted that under the Bank Holding Company Act, a company is defined as having control over another company if it directly or indirectly owns 25% of voting shares, controls the election of directors or trustees, or has a controlling influence over the management policies of the company. The ARB found that the Bank Holding Company Act's definition of "affiliate" (and in turn of "control") applied if the following rule is operative: unless the language of a statute states otherwise, Congress intends the definitions contained in a general definitions section (at Section 2 of Dodd-Frank) to apply wherever the terms appear in the same statute, including Section 929A of Dodd-Frank.

The ARB observed that under a second rule of statutory interpretation, one presumes that Congress is aware of existing law pertinent to the legislation it enacts. It noted the relevance of this rule given that Dodd-Frank Act's general definitions at Section 2 are preceded with the following language: "As used in this Act, the following definitions shall apply, except as the context otherwise requires or as otherwise specifically provided in this Act." The ARB also observed that Section 929A of Dodd-Frank was enacted in 2010 to clarify that SOX's anti-retaliation provision applies to employees of privately owned subsidiaries and affiliates of publicly traded companies, and that the ARB previously held that this amendment did not create a substantive change in the SOX.

The ARB concluded that the language of the amendment itself which provides coverage for a "subsidiary" or an "affiliate" is grounded in securities law: "a subsidiary or affiliate whose financial information is included in the consolidated financial statements of [a] company [with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l), or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d))]." The ARB concluded that applying the second rule of statutory interpretation, Sections 2 and 929A of Dodd-Frank called for defining "subsidiary" and "affiliate" within the securities law context. 

The ARB noted that public companies that are registered under Section 12 or that are required to file reports under Section 15(d) of the Securities Exchange Act of 1934 must file periodic reports with the SEC in accordance with Section 13 of that Act. It observed that an implementing regulation of Section 12 of the Exchange Act, 17 C.F.R. § 240.12b-2, defines "affiliate" as "a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified." The ARB noted that 17 C.F.R. § 240.12b-2 defines "control" (including the terms "controlling, "controlled by," and "under common control with") as "the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise." It also found that Regulation S-X, or 17 C.F.R. Part 210, governs financial reports filed with the SEC, and defines "affiliate" and "control" nearly identically to 17 C.F.R. § 240.12b-2.

The ARB found that the definitions in the securities regulations are supplemented by accounting rules and standards, which further guided its adjudication of the issue of "affiliate" and "control" as those standards are necessary for compliance with rules regarding reporting to the SEC. Under accounting rules, a public parent company that controls more than 50% of another entity's stock must consolidate, or combine, its financial information with that of its majority-owned subsidiary into one report to the SEC (consolidated financial statement).

The ARB noted that publicly traded companies may also be required to include the financial information of affiliates (or investees) who are less than 50% owned in the notes to the consolidated financial statements they file with the SEC under the "equity method" of accounting. A central component of the equity method is whether the public company exercises "significant influence" over the investee or affiliate. Accounting standards provide that a public company that has the capacity to exercise significant influence over the operating and financial policies of an "investee" may include the latter's financial information in its consolidated financial statements using the equity method.

The ARB observed that significant influence can exist even when the public company's percentage of ownership interest in the investee is between 20-50% and may be demonstrated when the public company exercises influence over the "operating and financial policies of an investee," including through representation on the board of directors, participation in the policy making process, involvement in transactions, shared managerial personnel, technological dependency, and other factors. Significant influence is presumed when there is a direct or indirect investment of 20% or more in the investee's voting stock, but is presumed absent when an investment is less than 20% of the investee's voting stock (unless such ability can be demonstrated). Ownership of 20% or more of the investee's stock cannot give rise to the presumption of significant influence over the operating and financial policies of the investee when an inquiry into the facts and circumstances shows predominant evidence of the inability to exercise it.

The ARB noted that the test for significant influence equates with the securities standard for "control"; when the private company or investee controls, is controlled by, or is under common control with the publicly held company, these two entities are "affiliates." The ARB thus concluded that when a publicly traded company holds a 20-50% ownership interest in a private investee and includes that investee's financial information in its consolidated financial statements orin the notes to its consolidated financial statements using the equity method of accounting, the company acknowledges it wields significant influence (i.e., control) over the functioning of the investee and that thereby the entity is its "affiliate" under SOX.

With regard to the facts of the appeal before the ARB, and for the fiscal year which ended on December 31, 2018, Owens-Illinois filed a Form 10-K as part of its annual reporting obligations pursuant to Section 13 of the Securities Exchange Act of 1934 in which Owens-Illinois identified TCSAP as its "[e]quity investment" and an "affiliate." Owens-Illinois's 2018 10-K stated it "use[d] the equity method of accounting for investments in which it ha[d] a significant influence and generally an ownership interest of 20% to 50%" and reported that it held a 25% ownership interest in TCSAP.

The ARB concluded that Owens-Illinois included TCSAP's financial information in the notes to its consolidated financial statement by presenting the "[s]ummarized information pertaining to the Company's equity affiliates" with "[e]quity in earnings" and "[d]ividends received" and unaudited "[s]ummarized combined financial information for equity affiliates." The ARB determined that this inclusion of TCSAP's financial information in the notes to Owens-Illinois's financial statements together with Owens-Illinois's own assessment of its significant influence over TCSAP, rendered Respondent TCNA, TCSAP's integrated entity and parent company, a covered "affiliate" of publicly traded company Owens-Illinois.

The ARB found that, under the definitions of "affiliate" and "control" in either the banking or securities frameworks, Respondent was covered by SOX through TCSAP Holdings' relationship with Owens-Illinois. The ARB then applied the overlapping element of the banking and securities definitions of "control" (the possession, direct or indirect, of the power to direct or cause the direction of the management and policies, via the ownership of voting shares, by contract, or otherwise)to the remaining facts pertaining to Respondent's relationship with Owen-Illinois.

The ARB concluded that the totality of the circumstances—Owens-Illinois's 25% ownership interest in TCSAP Holdings; Owens-Illinois's proportional, one-quarter representation on TCSAP's operating committee; the requirement that TCNA obtain Owens-Illinois's approval for TCSAP's unbudgeted capital requests exceeding $250,000 and for forward exchange contracts; and TCNA's provision of financial information to Owens-Illinois—illustrated that Owens-Illinois possessed the power to cause the direction of TCSAP's management or, in other words, had significant influence over TCSAP. The ARB determined that there was therefore no genuine issue that TCNA (as majority owner of TCSAP) and Owens-Illinois, were "affiliate[s]" as contemplated by SOX. The ARB found that this was further confirmed by the fact that Owens-Illinois treated TCSAP as its affiliate in its consolidated financial statements.

SOX-PROTECTED ACTIVITY; ALJ DETERMINATIONS REVERSED; COMPLAINANT REASONABLY BELIEVED RESPONDENT'S CONDUCT CONCERNING ENVIRONMENTAL FINES AND IBNR ACCRUALS VIOLATED SEC RULES OR REGULATIONS

Respondent mines trona ore and processes it into soda ash at a surface refining plant, where twenty-four baghouses control particulate emissions. Accounting firm KPMG audited Respondent's consolidated balance sheets and those of its subsidiaries. At a January 2019 quarterly review meeting, Complainant, Respondent's Vice President of Finance and Corporate Controller, told KPMG that Respondent was investigating dust-emission reporting fraud caused by malfunctioning baghouse equipment that could result in state environmental fines. Complainant alleged that his supervisor, Respondent's CEO and president, reprimanded him for reporting this to KPMG and for using the word "fraud" to describe the baghouse issues.

Complainant alleged that his report to KPMG was protected activity under SOX. The ALJ found it was not protected because KPMG lacked supervisory authority over Complainant. The ARB held that this was error, explaining that an auditor such as KPMG, whether internal or external to the employer's organizational structure, is a person with authority to investigate and terminate misconduct. Accordingly, reports of conduct reasonably believed to violate a SOX-enumerated provision are protected when made to a person with supervisory authority or another person working for the employer with authority to investigate, discover, or terminate misconduct. The ARB further found that protecting reports to auditors is consistent with SOX's purpose of protecting the integrity of the financial markets.

The ARB also held that the ALJ erred in finding Complainant's report to KPMG unprotected because it involved environmental fines and liabilities. It explained that if Complainant raised concerns that Respondent's handling of those fines and liabilities violated a SOX-enumerated provision, the report was protected despite its environmental subject matter. The ARB further held that SOX protection does not disappear merely because the report, or the prevention of financial misstatements, fell within Complainant's job duties. A complainant may engage in protected activity even when the conduct at issue is part of the complainant's job duties.

Complainant alleged that he engaged in protected activity by discussing with KPMG and management the fines, or material contingent liabilities, that the state environmental agency could impose for the dust-emission reporting failures. Although Respondent's CEO initially advised that the agency would seek elevated penalties exceeding $1 million, he later reversed course and removed projected accrual increases for two quarters. Complainant alleged that he accounted for the environmental liabilities to prevent inaccurate financial reporting and maintain sound internal controls.

Complainant also alleged that he engaged in protected activity by submitting to the parent company's accounting team an internal actuarial model for an Incurred-But-Not-Billed Report (IBNR) to calculate Respondent's accrued medical liability expenses. He alleged that the CEO chastised him for proposing the model, questioned the need for the accrual, and directed that it be removed from the financial reports. Complainant informed the CEO that the accrual was required under U.S. GAAP and alleged that he disregarded the instruction and recorded it.

The ALJ acknowledged that federal courts have consistently held that disclosures about the circumvention of internal controls are protected under SOX. But the ALJ concluded that, because those cases involved publicly traded companies and Respondent was not a publicly traded company or a subsidiary or affiliate of one, Complainant's activities concerning the environmental fine entries and IBNR accruals were not protected. The ARB held that this was clear error because Respondent was covered by SOX as an affiliate of Owens-Illinois, a publicly traded company. The ARB also emphasized that coverage and protected activity are distinct elements of a SOX whistleblower claim and should generally be analyzed separately.

The ARB observed that the SEC's rules and regulations require that companies filing periodic financial reports make and keep accurate books, records, and accounts; establish and maintain a system of internal accounting controls over financial reporting; and, disclose any material weakness in internal controls. It noted that SEC rules require compliance with U.S. GAAP in financial reporting and that a complainant's claim that activity furthers or maintains relevant accounting standards such as GAAP can constitute protected activity.

The ARB determined that at a minimum, Complainant's allegations concerning Respondent's attempts to circumvent accurate accrual of the material liabilities associated with the environmental fines fell under a reasonable belief of a violation of a rule or regulation of the SEC.

The ARB noted that Respondent did not dispute that Complainant was tasked with properly accounting and accruing the contingent liabilities related to the fines and that he discussed such accounting/accrual with KPMG. It also noted that Respondent did not dispute that Complainant communicated with and sought information from Respondent and TCSAP staff about the environmental fines for the purposes of accruing them. The ARB therefore held that Complainant engaged in protected activity concerning the environmental fine accruals.

The ARB found that the ALJ erred in summarily determining that Complainant had not engaged in protected activity with respect to his submission of the IBNR model. The ALJ concluded this on the basis that Complainant had not submitted evidence showing he refused to follow the CEO's instruction to reverse the IBNR accrual and provided a reason for that refusal. The ARB stated that an employee can engage in protected whistleblowing and be retaliated against without a public confrontation and a refusal to participate in the activity.

The ARB concluded that Complainant engaged in protected activity concerning the IBNR accruals as Respondent did not dispute that Complainant acted to comply with applicable accounting rules. It also noted that Respondent did not dispute that the CEO questioned the need for the IBNR accruals, Complainant submitted an internal model to the parent company accounting team, that Ellis chastised Complainant for that submission, and that Complainant replied to the CEO that the IBNR accrual was required by GAAP.

SOX-PROTECTED ACTIVITY; REMAND FOR HEARING AND DECISION ON THE MERITS; FACTUALLY DISPUTED CLAIMS CONCERNING SEC RULES AND REGULATIONS, FEDERAL LAW RELATED TO SHAREHOLDER FRAUD

The ARB identified two alleged activities that would be SOX-protected if they occurred, but found the facts disputed. It remanded for the ALJ to hold a hearing and decide whether Complainant asked managers for documentation showing the company had reported fraudulent dust-emission reporting to WDEQ and that environmental fines had been waived. If so, the ARB found those requests could be protected because they related to internal accounting controls and possible SEC violations.

The ARB also remanded for the ALJ to determine whether Complainant objected to the cancellation of a retired account manager's consulting contract. Complainant alleged the CEO cancelled the contract because the account manager had been a whistleblower. If Complainant made that objection, it could be protected under SOX as reporting conduct reasonably believed to constitute a violation of Federal law relating to fraud against shareholders.

SOX-PROTECTED ACTIVITY; REMAND; GENUINE ISSUE OF MATERIAL FACT; POSSIBLE REASONABLE BELIEF CLARIFYING LOAN AGREEMENT TERM AVOIDED BANK FRAUD

Complainant alleged that he engaged in SOX-protected activity when he: alerted management to Respondent's potential non-compliance with a loan agreement with a lender bank requiring the filing of "consolidating statements"; sought clarification from the bank as to the meaning of the term; and negotiated a clarifying amendment after learning the statements had not been filed. Complainant alleged the CEO reprimanded him for doing so.

The ALJ found this was not protected activity because there was no evidence Complainant reported or reasonably believed Respondent had engaged in bank fraud. The ARB disagreed, holding that the ALJ failed to address evidence supporting Complainant's reasonable belief that certifying compliance without the required statements could amount to bank fraud under 18 U.S.C. § 1344, the bank fraud statute enumerated in SOX. The ARB emphasized that, for SOX purposes, Complainant needed to show only a reasonable belief of a violation, not prove the elements of bank fraud.

UNTIMELY FILED CAA CLAIM; EQUITABLE MODIFICATION PRINCIPLES INAPPLICABLE

The ARB affirmed the ALJ's determination that Complainant's CAA claims were untimely because the statute requires filing within 30 days after the employee receives final, definitive, and unequivocal notice of the adverse action. Complainant filed more than 30 days after receiving notice of both his bonus reduction and his termination, such that these CAA claims were untimely.

The ARB also agreed with the ALJ that equitable modification did not extend the filing deadline. It explained that equitable tolling applies when a complainant, despite reasonable diligence, could not timely file, while equitable estoppel applies when an employer induces complainant's delay in filing the complaint through, for example, deliberate deception, misleading conduct, or coercion. The ARB found substantial evidence that Respondent's decision to terminate Complainant never changed, that any offer to extend his employment was made only to assist his successor's transition, and that counsel's delayed responses or requests for extensions regarding severance proposals did not alter that decision or communicate otherwise. Because the CAA claims were untimely and equitable modification did not apply, the ARB found it unnecessary to address whether Complainant engaged in CAA-protected activity. The ARB also affirmed the ALJ's determination that Respondent's severance offer and the settlement which ensued between the parties regarding severance did not constitute an adverse action. The ARB also affirmed the ALJ's determination that Respondent's denial of severance was not an adverse action as it was a discretionary benefit negotiated by both parties.

HOSTILE WORK ENVIRONMENT; FAILURE TO RAISE GENUINE ISSUE OF MATERIAL FACT

The ARB noted that unlike discrete acts, a hostile work environment claim is based on the cumulative effect of repeated conduct over time, and a single act of harassment may not be actionable on its own. The ALJ found that Complainant failed to raise a genuine issue of material fact supporting a hostile work environment claim and further concluded that any such hostile work environment ended, as a matter of law, on Complainant's last day of work.

The ARB rejected Complainant's argument that he established a hostile work environment that would extend the CAA filing deadline under a continuing violations theory. Although Complainant cited emails and alleged that Ellis sharply and disrespectfully criticized his handling of accounting matters, the ARB found that the alleged conduct did not create a genuine issue of material fact under the high bar for a hostile work environment. The ARB explained that such a claim requires discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of employment and create an abuse work environment. Discourtesy, rudeness, and the ordinary tribulations of the workplace are not enough. The ARB therefore agreed with the ALJ that Complainant's allegations were insufficient to establish a hostile work environment.

Szmurlo v. ThyssenKrupp Elevator, ARB Nos. 2026-0025, -0026, ALJ No. 2025-SOX-00034 (ARB June 23, 2026) (Decision and Order Denying Interlocutory Appeals)

Interlocutory Appeals Denied

In Szmurlo v. ThyssenKrupp Elevator, ARB Nos. 2026-0025, -0026, ALJ No. 20225-SOX-00034 (ARB June 23, 2026), the ARB denied Complainant's petition for interlocutory review and remanded the case to OALJ to continue the agency proceedings.

Before the ALJ, Respondent filed a Motion to Dismiss arguing that it was not subject to SOX coverage. The ALJ determined that he could not assess Respondent's coverage based on the Motion to Dismiss, but stated that "principles of judicial economy require that I resolve the question whether Respondent is a ‘covered person' under SOX before proceeding with any other aspect of this case." Accordingly, the ALJ opened discovery "limited to the question whether Respondent is a ‘covered person' under SOX."

Complainant then sought discovery from Respondent and a third-party. The ALJ denied Complainant's request to issue a subpoena duces tecum and interrogatories to a third-party, declined to order Respondent to respond to discovery that the ALJ determined was outside the scope of limited discovery, and declined to issue sanctions against Respondent. Complainant requested the ALJ certify these and other issues for immediate interlocutory review, but the ALJ declined. Complainant then appealed to the ARB.

When a party seeks interlocutory review of an ALJ's non-final order, the ARB has elected to look to the interlocutory review procedures used by federal courts, including requesting the trial court certify issues involving a controlling question of law for immediate appeal in accordance with 28 U.S.C. § 1292(b). The ALJ denied certification in this case.

If a party has failed to obtain ALJ certification, the ARB may still consider reviewing an interlocutory order that meets the narrow "collateral order" exception. To fall within the "collateral order" exception, the order appealed must: (1) conclusively determine the disputed question; (2) resolve an important issue completely separate from the merits of the action; and (3) be effectively unreviewable on appeal from a final judgment.

The ARB determined that Complainant's appeals did not satisfy the third prong of the collateral order test. To be "effectively unreviewable," the right sought to be vindicated must "be, for all practical and legal purposes, destroyed if it were not vindicated prior to final judgment." As long as the rights at issue "can be adequately vindicated by other means, the chance that the litigation at hand might be speeded, or a particular injustice averted, does not provide a basis for" immediate appellate review of an interlocutory order.

The ARB determined that the claims that Complainant identified for review are all fully reviewable upon appeal of the final decision of the ALJ. In essence, Complainant argued that these issues will be unreviewable on appeal from a final decision by the ALJ because delayed review would be inadequate and lost opportunities in discovery would arise. However, the ARB discerned no reason why the Board could not review the ALJ's decisions on these issues after the ALJ issued a decision.

With respect to the ALJ's subpoena authority, "the ARB has previously decided subpoena authority issues after a hearing on the merits and a judgment has been issued by the ALJ as part of the review of a final agency decision."

The ARB also rejected Complainant's request to immediately review other issues involving pre-hearing discovery, evidentiary matters, and sanctions, all matters soundly within the ALJ's discretion. With respect to these and Complainant's other allegations of error regarding discovery, the ARB noted that "[c]ourts rarely grant interlocutory appeal of discovery orders."

Complainant also argued that his ability to litigate was being destroyed because he is indigent and is experiencing food insecurity and that his professional reputation is being destroyed. As unfortunate as these circumstances are, and as sympathetic as the ARB was to them, the ARB determined they did not justify hearing the case at this stage where the issues are reviewable on appeal after a decision by the ALJ.

Adm'r, Wage & Hour Div., USDOL v. Ace Amusements, ARB Nos. 2024-0019, -0036, ALJ Nos. 2022-TNE-00015, -00016 (ARB June 9, 2026) (Decision and Order)

VIOLATIONS OF THE INA AND H-2B REGULATIONS; BACK WAGES; CMPS; DEBARMENT

In Adm'r, Wage & Hour Div., USDOL v. Ace Amusements, ARB Nos. 2024-0019, -0036, ALJ Nos. 2022-TNE-00015, -00016 (ARB June 9, 2026), the ARB affirmed the ALJ's D. & O. in part and vacated and remanded in part.

Respondents operate carnivals throughout the western United States. In 2021, the DOL granted certification for Midway West to hire 42 H-2B workers and for Ace to hire 50 workers for April 1, 2021, to November 15, 2021. On July 1, 2021, police officers executed a search warrant on Midway West because they had received information about possible labor trafficking, and arrested Ace Amusements owner Jordan Jensen. Upon learning of the arrest, the WHD launched an investigation into Respondents.

On April 14, 2022, after several months of failed attempts at contacting Midway West's owner and operator, Michelle Jensen, the WHD issued the Midway West Determination Letter. The WHD assessed back wages and civil money penalties (CMPs) for Midway West's seven violations of the Attestations set forth in the TEC and imposed a five-year debarment. That same day, the WHD also issued the Midway/Ace Determination Letter, which assessed back wages and CMPs for Midway West and Ace's nine joint violations and imposed a five-year debarment.

Respondents requested a hearing before an ALJ. A hearing was held on April 18-19, 27-28, and May 1-3, 2023. On January 5, 2024, the ALJ issued the D. & O., finding that Respondents committed twelve of the sixteen alleged violations, including: (1) Midway West did not pay the proper wage rate, (2) Ace did not pay the proper wage rate, (3) Midway West failed to notify OFLC that several workers separated from employment early, (4) Midway West failed to pay inbound transportation costs, (5) Ace failed to pay inbound transportation costs, (6) Midway West failed to pay outbound transportation costs, (7) Ace failed to pay outbound transportation costs, (8) Midway West engaged in prohibited retaliation and intimidation, (9) Midway West failed to cooperate with the DOL, (10) Ace and Midway West jointly placed workers outside the area of intended employment, (11) Ace and Midway West jointly failed to provide earnings statements, and (12) Ace and Midway West jointly failed to provide safe transportation.

The ALJ found that Midway West did not violate the prohibition of placing workers in unapproved job classifications. The ALJ was unable to determine whether Respondents failed to comply with all deduction requirements and remanded to the WHD for further reconsideration. The ALJ did not issue a conclusion on whether Respondents failed to disclose the job order and post a notice of workers' rights. The ALJ reversed the WHD's imposition of CMPs and remanded all wage determinations, including the payment of wages, overtime, reimbursement for travel expenses, and the failure to make deductions required by law, to the WHD for further consideration. Lastly, the ALJ debarred Respondents for five years. Both parties petitioned the ARB to review the D. & O.

RESPONDENT VIOLATED THE INA AND THE H-2B REGULATIONS; IMPROPER WAGE RATE; FAILED TO NOTIFY EARLY DEPATURE; FAILED TO PAY INBOUND AND OUTBOUND EXPENSES; PROHIBITED RETALIATION AND INTIMIDATION; FAILURE TO COOPERATE WITH DOL; PLACED WORKERS OUTSIDE THE AREA OF INTENDED EMPLOYMENT; FAILED TO PROVIDE EARNINGS STATEMENTS; FAILED TO PROVIDE TRANSPORTATION; VIOLATED THE PROHIBITION AGAINST PLACING WORKERS IN UNAPPROVED CLASSIFICATIONS

Under the H-2B regulations, a violation is substantial if it is both willful and a significant deviation from the terms and conditions of the H-2B forms. Willfulness includes knowing violations or reckless disregard for whether conduct satisfies program requirements. Employers who sign H-2B certifications attest under penalty of perjury that they understand and will comply with program obligations. When employers fail to keep accurate records, damages may be determined under the burden-shifting framework of Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). CMPs may be imposed for substantial failures or willful misrepresentations, and debarment may be imposed for up to five years based on the severity of violations.

The ARB rejected Respondents' argument that willfulness required specific subjective knowledge, explaining that the H-2B regulations define willfulness to include reckless disregard. Because both Respondents signed the TECs under penalty of perjury, the ARB found that they knew of their obligations and nonetheless disregarded them. Accordingly, the ARB affirmed the ALJ's findings that Respondents failed to pay proper wages, failed to pay required inbound and outbound transportation costs, failed to notify the government when certain workers ended employment early, retaliated against workers, failed to cooperate with investigators, placed workers outside the approved area of intended employment, failed to provide earnings statements, and failed to provide safe transportation. 

The ARB reversed the ALJ on the prohibition of placing workers in unapproved job classifications issue. The ARB found that Midway West improperly assigned some H-2B workers to driving duties without disclosing those duties or a commercial driver's license requirement in the job order, and paid drivers extra compensation not disclosed to U.S. workers, thereby harming U.S. workers and violating the prohibition on unapproved job classifications. 

REMAND TO WHD NOT PERMISSIBLE; ALJ MAY ONLY AFFIRM, DENY, REVERSE, OR MODIFY WHD'S DETERMINATION

The ARB found that the ALJ erred in remanding to the WHD to determine whether Respondents failed to make all deductions required by law. An ALJ may affirm, deny, reverse, or modify, in whole or in part, the determination of the WHD. The only situation in which an ALJ may remand to the WHD is when the WHD assesses back wages for wage violations of Section 503.16 based upon a prevailing wage determination obtained by the Administrator from OFLC during the investigation and the ALJ determines that the Administrator's request was not warranted. Because that did not apply, the ARB found that the ALJ did not have the authority to remand to the WHD.

When an employer fails to keep and maintain accurate records, an ALJ may use the two-step burden-shifting framework articulated in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687-88 (1946). Under this framework, if an employer's records are inaccurate or inadequate, the WHD must show that the workers performed work for which they were improperly compensated by producing sufficient evidence to show the amount and extent of that work. If the WHD meets its burden, then the burden shifts to the employer to produce evidence of the precise amount owed. If the employer fails, the court may award damages even though the result may be only approximate.

The ARB vacated the ALJ's order remanding to the WHD and remanded to the ALJ to apply the Mt. Clemens Pottery Co. framework to determine whether Respondents failed to make all deductions required by law, and, if so, to what amount.

The ARB found that the ALJ erred in not determining whether Respondents violated the requirements to disclose the job order and to post a notice of workers' rights. The ARB remanded to the ALJ for further consideration.

REMEDIES; BACK WAGES; CMPS

If the Administrator determines an employer has violated the requirements of the H-2B program, the Administrator may assess remedies, including the recovery of unpaid wages, CMPs, and debarment from the H-2B program.

The Administrator may assess a CMP for each violation that is either a willful misrepresentation of a material fact; a substantial failure to meet any of the terms and conditions of the H-2B forms; or a willful misrepresentation of a material fact to the Department of State during the H-2B nonimmigrant visa application process. "Each such violation involving the failure to pay an individual worker properly or to honor the terms or conditions of [the aforementioned H-2B forms] constitutes a separate violation."

For violations related to wages, impermissible deductions, or prohibited fees and expenses, Section 503.23(b) provides that the Administrator may assess CMPs "that are equal to the difference between the amount that should have been paid and the amount that actually was paid to such worker(s)," subject to a maximum of $12,383. Back wages further the purposes of the H-2B program by reducing the employer's incentive to bypass U.S. workers in order to hire H-2B workers who are more easily exploited.

The ARB held that the ALJ erred in remanding the wage determinations to the WHD. Because Respondents failed to keep and maintain records, the ALJ should have applied the Mt. Clemens Pottery Co. burden-shifting framework to determine the wages and expenses Respondents owed their H-2B workers. The ARB vacated the ALJ's remand order and remanded to the ALJ for further consideration.

The ARB also held that the ALJ erred in reversing all CMPs. The ALJ had eliminated all CMPs in part because he found that CMPs would be unlikely to ensure Respondents' compliance in the future and would be more likely to result in years of litigation, and found that debarment served as an appropriate sanction. The ARB found that the ALJ erred in reducing CMPS without applying the regulatory factors, which include: (1) any previous history of H-2B violations by the employer; (2) the number of workers affected by the violation; (3) the gravity of the violation; (4) the good-faith efforts by the employer to comply; (5) the employer's explanation for the violation; (6) the employer's commitment to future compliance; and (7) the extent to which the employer achieved a financial gain or workers suffered a potential financial loss. The ARB held that the ALJ's decision contradicted the purpose of CMPs and the ALJ erred in conflating the purpose of CMPS with debarment, which serve different purposes. Penalties punish noncompliance and serve as a deterrent while debarment protects the integrity of the H-2B program. The ARB vacated the ALJ's order and instructed the ALJ to reassess CMPs.

DEBARMENT 

An employer may be debarred from the H-2B program for one to five years if it: (1) willfully misrepresented a material fact in its H-2B forms; (2) substantially failed to meet any of the terms and conditions of the wage determination, TEC, or H-2B petition; or (3) committed a willful misrepresentation of a material fact during the visa application process. The regulations list twelve violations that may justify debarment, which include the failure to pay required wages, the employment of H-2B workers outside the area of intended employment, and "[a]ny other act showing such flagrant disregard for the law that future compliance with program requirements cannot reasonably be expected." "The appropriate period of debarment [is] based on the severity of the violation."

When analyzing the issue of debarment, the ARB must consider two questions: first, do grounds exist to debar the employer; and second, if so, how long should the employer be debarred. The ARB found that Respondent substantially failed to meet the terms and conditions set forth in the H-2B forms for the reasons discussed above for two violations that justify debarment: (1) the failure to pay required wages, and (2) employing H-2B workers outside the area of intended employment.

The ARB found that Respondents demonstrated a wanton and brazen indifference to the INA regulations and the H-2B program requirements, and affirmed Respondents' debarment for the maximum period of five years.

Prkic v. Sezzle, Inc., ARB No. 2026-0034, ALJ No. 2025-SOX-00021 (ARB June 5, 2026) (Order of Dismissal)

ORDER TO SHOW CAUSE; DISMISSAL

In Prkic v. Sezzle, Inc., ARB No. 2026-0034, ALJ No. 2025-SOX-00021 (ARB June 5, 2026), the ARB dismissed the appeal and denied Complainant's Motion for Immediate Intervention and Supplemental Motion because the ARB found no evidence was presented to support the existence of an Order issued by the ALJ on April 10, 2026, in this case.

This is the second time this case has come before the ARB. In the first case, ARB Case No. 2025-0074, the ALJ issued an Order Granting Summary Decision (ALJ Decision) on July 14, 2025, concluding that Complainant's claim was untimely and not subject to equitable tolling. On July 28, 2025, Complainant filed a Petition of Review of the ALJ Decision with the ARB. On March 6, 2026, the ARB issued a Decision and Order Reversing and Remanding (ARB Decision) because Complainant's claim was entitled to equitable tolling. Accordingly, the ARB remanded the case to the ALJ for further proceedings.

On April 23, 2026, Complainant filed with the ARB a Motion for Immediate Intervention and Complainant and a Supplemental Motion. Complainant alleged that, after the ARB Decision, the ALJ in her case issued a favorable decision in her favor on or about April 10, 2026, and the decision should be released.

On May 4, 2026, the ARB issued an Order to Show Cause, ordering Complainant to file a brief stating why she believes the ALJ issued a decision in her favor on April 10, 2026, including what evidence she has that such decision exists or was issued.

The ARB reviewed the responses to the Order to Show Cause and found no evidence was presented to support the existence of an Order issued by ALJ Larsen on April 10, 2026, in this case. The ARB noted how the Chief ALJ stated via email to Complainant that "the only decision of [the ALJ] in the record is his order of July 14, 2025. I am not aware of an April 10, 2026 decision." Accordingly, the ARB denied Complainant's Motion and Supplemental Motion, and the ARB dismissed the appeal.