In the recent case of Murray v. UBS Securities LLC et al., the U.S. Supreme Court unanimously ruled that whistleblowers do not need to show retaliatory intent as part of a retaliation claim against an employer under the Sarbanes-Oxley Act (“SOX”), which governs corporate financial reporting and recordkeeping. The Supreme Court reinstated a $900,000 jury verdict awarded to the Plaintiff in 2017. Some commentators suggest that this ruling may have far‑reaching, if indirect, impacts on burdens of proof under other discrimination and whistleblower statutes.
Background
SOX was created in response to several highly publicized scandals involving public and private companies. Provisions in SOX define the responsibilities of company boards and include criminal penalties for certain types of corporate misconduct. SOX includes strong whistleblower protections to encourage employees to report concerns. SOX applies to all domestic public companies, non-public companies with publicly traded debt securities and, potentially, companies that do business with publicly traded companies, even if they aren’t publicly traded themselves. Among other things, SOX provides protection for whistleblowers who work for covered companies when they disclose information that they reasonably believe shows a violation of federal securities law, SEC rules or any federal law related to fraud against shareholders.
Unanimous Decision
In siding with the whistleblower, the Justices stated: “Showing that an employer acted with retaliatory animus is one way of proving that the protected activity was a contributing factor in the adverse employment action, but it is not the only way.” The plaintiff only needs to show that their protected activity contributed to an unfavorable personnel action, such as a firing. The burden then shifts to the employer to prove it would have taken that same adverse action regardless of the employee’s protected activity. The Justices said that this framework “is meant to be plaintiff-friendly.”
“When an employer treats someone worse — whether by firing them, demoting them, or imposing some other unfavorable change in the terms and conditions of employment — ‘because of’ the employee’s protected whistleblowing activity, the employer violates [SOX],” Justice Sotomayor said. “It does not matter whether the employer was motivated by retaliatory animus or was motivated, for example, by the belief that the employee might be happier in a position that did not have [SEC] reporting requirements.”
In a concurring opinion, Justice Samuel Alito wrote that the Supreme Court’s rejection of a retaliatory intent requirement does not read intent completely out of the law; plaintiffs still need to show an intent to discriminate. “The plaintiff must show that a reason for the adverse decision was the employee’s protected conduct,” but the “plaintiff need not prove that the protected conduct was the only reason or even that it was a principal reason for the adverse decision.”
Amicus attorney Stephen M. Kohn called the ruling “a sweeping victory for whistleblowers across the board,” stating further: “This now is the most pro-employee labor law in the country. By statute, it has shifted the burdens of proof in a manner for which a whistleblower can realistically prevail.”
Practical Takeaways
- Given the increase in potential whistleblower liability, employers should make sure whistleblowers have an avenue for their claims to be heard and addressed within the organization.
- All employers should be documenting employee issues as they arise. This is crucial because, after an employee raises whistleblower issues with the company, belatedly raised concerns will likely appear retaliatory.
- The better the documentation of performance concerns and/or eyewitness accounts of misconduct, the easier it will be for the employer to prove at trial that the same decision would have been made, even if the employee had not reported concerns.
If you have any questions, please contact:
- Mark Sabey at (303) 801-3538 or marksabey@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer an individual’s questions that may constitute legal advice.
