Yesterday, the Supreme Court handed down its decision in Lawson v. FMR LLC, holding 6-3 that employees of public companies’ private contractors are protected by the Sarbanes-Oxley Act’s whistleblower protections. The Sarbanes-Oxley Act (“SOX” — which was enacted in 2002 following the collapse of Enron) includes a provision that protects whistleblowers from adverse employment action for reporting corporate misconduct by public companies. The Court’s ruling clarifies who can bring a whistleblower claim under SOX, concluding that both employees of public companies and employees of their contractors can raise a claim of retaliation under the Act.
So how does yesterday’s decision impact private employers? For most employers the impact is somewhere between nothing and minimal. However, private companies that are contractors of publicly traded companies — and in particular private companies that are closely related to public companies — should take care to respond to concerns raised by their employees about the conduct of their public client to avoid any adverse employment action in response.