The Supreme Court just rejected an employer’s argument that a whistleblower needs to show the employer acted with retaliatory intent to prove retaliation under the Sarbanes-Oxley Act (SOX), a federal law that protects financial investors. Thursday’s decision resolves a disagreement among federal appeals courts and sets a consistent standard of proof in SOX cases. As a result, we expect to see more whistleblower claims make it to a jury trial. As we predicted last month, the Court reversed the 2nd Circuit and unanimously held that a whistleblower needs to show that their protected activity (such as reporting or disclosing violations of SEC rules and regulations) was a contributing factor in the adverse employment decision. The Court clarified that an employee does not need to prove that the employer had discriminatory intent to retaliate. The ruling impacts how publicly traded companies will defend against SOX retaliation claims and will likely affect whistleblower protections under other laws that are similarly structured. This underscores the importance of employers being able to articulate the reasons for the employment decision and to prove they would have made the decision anyway in such cases. Here’s what you need to know about the ruling and its impact on employers.
What Are the Key Issues?
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