U.S. Supreme Court Extends Federal Whistleblower Protections

Mar 4 2014 - General, Workplace Policies - Gail Cecchettini Whaley

Today, the U.S. Supreme Court ruled that the whistleblower protections of the Sarbanes-Oxley Act (SOX) extend to employees of private sector companies that contract and subcontract with public sector companies. Justice Ginsburg delivered the opinion of the court.

Justice Ginsburg said in her opinion that the law “shelters employees of private contractors that serve public companies, just as it shelters the public companies’ own employees.”

The case was brought by employees of privately held companies (collectively FMR) that provided advisory and management services to a publicly held mutual fund – the Fidelity family of mutual funds. As is common in the industry, the mutual funds served by FMR were public companies with no employees.

The employees alleged they were retaliated against by FMR after “blowing the whistle” on alleged fraud in financial reporting practices and planned SEC filings affecting Fidelity funds. FMR argued that SOX’s protections applied only to employees of public companies and not to employees of private companies that contract with public companies.

The Supreme Court, in a 6-3 vote, disagreed.

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

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