Does the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, which forbids publicly traded companies, mutual funds, and contractors or subcontractors of such companies from discriminating or retaliating against an employee because of certain protected conduct, protect an employee of a privately-held contractor or subcontractor of a public company?
Jonathan Zang and Jackie Hosang Lawson sued their respective Fidelity employers, alleging that the companies retaliated against them for reporting what they believed to be securities law violations. Section 1514A of the Sarbanes-Oxley Act protects employees of public companies from retaliation after the employee “blows the whistle” on the company. Zang and Lawson argue that § 1514A should also apply to employees of private contractors and subcontractors contracting with public companies, since these employees may be in the best position to report problems. FMR LLC argues that Congress only intended § 1514A to apply to public employees, and that extending coverage would result in an unmanageable amount of litigation. The First Circuit ruled that § 1514A protects only public employees, and that Congress must expand coverage if it wants to cover employees of private contractors. The Supreme Court will address whether and to what extent Sarbanes-Oxley provisions apply to private companies. The Court’s decision will impact employees of private companies that contract with public companies, and whether private employees will be protected from retaliation if they report securities violations to the Securities Exchange Commission.
Is an employee of a privately-held contractor or subcontractor of a public company protected from retaliation by § 1514A?
- Greg Stohr, Sarbanes-Oxley Whistle-Blower Rules Get Top Court Review, Bloomberg News, (May 20, 2013).
- Josh Lawler and Kevin Malcolm, Lawson et al. v. FMR LLC: Sarbanes-Oxley’s Whistleblower Protection is Limited to Employees of Publicly Traded Companies, LawUpdates, (Mar. 28, 2012).
- Barbara Leonard, Whistle-Blower Issue Picked Up by Justices, Courthouse News Service, (May 20, 2013).
- Matt Allen and Todd Holleman, SEC Whistleblower Program: What Employers Need to Know, JDSupra Law News, (July 29, 2013).