The United States Supreme Court recently ruled in the case of Lawson v. FMR, LLC that people employed by a private company that is either a contractor or subcontractor or a public company are to be extended the same protections afforded to whistleblowers under the Sarbanes-Oxley Act. This 6-3 decision marked a reversal of a decision made by the First Circuit Court of Appeals, and marks a dramatic expansion of whistleblower law in the United States.
A mutual fund company had previously employed the plaintiffs in the case. The employees became concerned about the cost accounting methodology used at the organization, and noticed that there was a prevalence of overstating federal filings and expenses. But when they raised their concerns with their employers, they were promptly fired. They sued the company under section 806 of the Sarbanes-Oxley Act (SOX).
The defendant, FMR, argued that because it was not a public company, it was not subject to the rules outlined in SOX. The district court initially denied this argument, which led to the appeal in which the First Circuit appeals court ruled in the favor of the defendant.
This ruling offers new protections for potential whistleblowers everywhere, and particularly greater incentive for employees working for private subcontractors of public companies to come forward when they are made aware of wrongdoing. It marks the latest instance of expansion in whistleblower protection in the United States over the last several years.
If you are working for a private contractor that you believe is committing fraud or any other type of crime, it’s important that you seek legal protection in the event that your employer retaliates against you for raising your concerns. Speak with the Dallas whistleblower attorneys at Whistleblower Law for Managers for more information about your legal options.