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.

Yes, at least a little. It’s true that the Supreme Court’s decision today in Sandifer v. United States Steel Corp. only directly impacts employers whose employees are unionized, wear safety gear and aren’t paid for the time spent “donning and doffing” their safety gear before and after their shift.  However, Sandifer is a unanimous decision (other than a footnote with which Justice Sotomayor disagreed) from the Supreme Court that relies on a common sense interpretation of the statutory language and reaches an employer-friendly result.  The decision also includes an interesting discussion of the de minimis rule (which employers often rely on to avoid paying employees for incidential, very short periods of off the clock work).  It remains to be seen how courts will interpret today’s decision.

Today the Supreme Court will hear arguments in the case of U.S. v. Quality Stores.  The issue before the Court is whether FICA needs to be withheld and paid on severance payments.  The question is whether severance payments are “remuneration for employment” which are taxable for FICA purposes (as the IRS and Obama administration argue) or “supplemental unemployment benefits” which aren’t taxable for FICA purposes (as the former employer Quality Stores argues).  In September 2012, the 6th Circuit Court of Appeals ruled in Quality Stores’ favor, holding that the severance payments to former employees were not taxable under FICA and that the amounts paid to the government should be refunded.   While the amount at issue in the Quality Stores case is relatively modest, a decision in Quality Stores’ favor would open the door to employers across the country seeking FICA refunds.  We expect a decision in June and will post an update when it’s issued.