The United States Supreme Court handed down an important employment law ruling last week that extends whistleblower protection to a broader range of employees. Previously whistleblower laws only protected employees at publicly traded companies under the theory that the public has the most to gain from exposing fraud and wrongdoing that impacts the interests of public shareholders. Under the new ruling, employees who work at companies that work as subcontractors for publicly traded companies will also have protections under the Sarbanes-Oxley Act. The Sarbanes-Oxley Act was created in 2002 after Enron and other corporate misconduct scandals impacted millions of innocent shareholders.
This will impact companies like accounting firms, law firms, investments advisors, and others that provide services to publicly traded companies. Experts say that the extension could implicate several million companies in the United States.
Justices writing for the majority said that they were confirming the validity of the way that the Department of Labor has been interpreting the law for many years. The dissent expressed concerns that the extension would be too broad.
One important detail about whistleblower protections is that they extend to employees who report activity that they believe to be illegal within the company, not just professional misconduct.
Employees who do report activity that they believe is illegal are protected from retaliation or harassment under federal whistleblower protection laws. This means that they cannot be fired for making these reports in good faith. In some cases the government even offers rewards for particularly fruitful reports of illegal conduct.
Source: Reuters, “U.S. justices extend employee whistleblower protections,” Lawrence Hurley, March 4, 2014.