High Court Extends SOX Whistleblower Protection to Employees of Private Contractors and Subcontractors

-
Congress enacted the Sarbanes-Oxley Act of 2002 (SOX) to safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron.

In a recent decision, the United States Supreme Court ruled that the whistleblower protection included in SOX protects not only the employees of public companies, but also the employees of privately-held contractors and subcontractors who render services to public companies.  See Lawson v. FMR LLC, No. 12-3 (March 4, 2014).  

Drawing on, among other things, the legislative record, the plain language of the statute and Congressional intent, the Court noted that to exclude employees of private contractors and subcontractors would leave them vulnerable to retaliation by their employers for blowing the whistle on schemes to defraud public company investors, even if the schemes were engineered entirely by the contractor or subcontractor.

Private contractors and subcontractors that do business with, or otherwise provide services to, public companies should ensure they implement policies prohibiting retaliation and train their managers to understand and enforce the policies.  


Comments

Post a Comment

Popular posts from this blog

(Un)Intended Consequences? Can Employers be Sued Under the New Texas Heartbeat Act?

-
On September 1, 2021, the most restrictive abortion law in the country went into effect in Texas.  Known as the "Texas Heartbeat Act," the statute, which creates a new subchapter of Chapter 171 of the Texas Health and Safety Code, privatizes a right of action against people who aid and abet abortions in violation of the new law. More specifically, the statute provides that "any person" other than a state actor can bring an action against "any person" who: knowingly engages in [or intends to engage in] conduct that aids or abets the performance or   inducement of an abortion , including paying for or reimbursing the costs of an abortion through insurance or otherwise, if the abortion is performed or induced in violation of this subchapter, regardless of whether the person knew or should have known that the abortion would be performed or induced in violation of this subchapter. ..(emphasis added). How could this affect employers?   First, how broadly will c...
Read more

Ten Things Texas Employers Need to Know About the New "No Need for a Firearm Carry Permit" Law

-
 At a time when gun violence is increasing across the country, and based on publicly available data, Texas currently ranks second in the nation (behind Illinois) in mass shootings for 2021, the Texas Legislature enacted the Firearm Carry Act of 2021.  Here's what Texas employers need to know: 1.     The effective date of the new law is September 1, 2021. 2.     The law applies to persons 21 years of age or older and not otherwise prohibited by state or federal law from possessing a firearm, and to those 18 years or older in the military. 3.    Persons who meet the criteria in #2 above will be able to carry a firearm without a government issued license or permit, which means they will not be required to take gun safety and handling courses as a prerequisite to carrying. 4.     The law does not prohibit an employer from prohibiting an employee who lawfully carries without a permit from possessing the firearm on the employer's premises. 5....
Read more

Are Private Employers Ready for the New Sexual Harassment Laws in Texas?

-
Texas is considered an employer-friendly state, so it may come as quite a surprise that several bills that significantly impact sex harassment law passed, without fanfare, in the last legislative session, and go into effect today, September 1, 2021.  More specifically, the legislature amended several sections of Chapter 21 of the Texas Labor Code, which includes the state's version of Title VII, to be more in line with the laws of California.  Here's what employers need to know: First, the legislature amended Chapter 21 to provide that with respect to sexual harassment , an "employer" is a person who employs 1 or more employees or "acts directly in the interest of an employer in relation to an employee."   What does this mean and why does it matter?   Until today, Chapter 21 has applied to employers with 15 or more employees; therefore, this amendment now covers virtually every employer with respect to sex harassment claims.  It also means that indivi...
Read more