SCOTUS extends Sarbanes-Oxley's whistleblower protection to employees at private companies

Private companies should assess their relationships with public companies to determine whether they may fall under the Act’s protection

On March 4, 2014, a divided Supreme Court reversed the 1st Circuit Court of Appeals and held in a 6-3 decision in Lawson v. FMR LLC that Sarbanes-Oxley's whistleblower protection extends to employees of privately held contractors and subcontractors that perform work for public companies, and not only to employees of public companies.

The Court began its decision by highlighting the purpose behind Congress' enactment of the Sarbanes-Oxley Act of 2002—namely, "[t]o safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corporation." The Court noted that of particular concern to Congress was "abundant" evidence that Enron had succeeded in perpetuating its massive shareholder fraud in large measure due to a "corporate code of silence."

Contributing Author

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Jill Vorobiev

Jill Vorobiev is a member of Dykema's Labor and Employment Group, with an emphasis on labor and employment litigation. Her practice covers a broad-base, representing corporate clients...

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