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Supreme Court Ruling Expands SOX Whistleblower Protections: What Employers Need to Know

On February 8, 2024, the U.S. Supreme Court unanimously ruled in Murray v. UBS Securities, LLC, that employees bringing whistleblower claims under the Sarbanes-Oxley Act (SOX) do not need to show retaliatory intent from their employer. This decision significantly strengthens protections for whistleblowers reporting potential corporate misconduct and raises new concerns for employers. 

For background, SOX was enacted in 2002, to protect investors by improving corporate governance and accountability. It prohibits publicly traded companies from retaliating against employees who report, in good faith, potential violations of securities laws or accounting regulations. 

Previously, to succeed in a SOX retaliation claim, an employee had to prove: 

  • They engaged in protected activity (reporting a potential violation); 
  • Their employer took adverse action against them (e.g., termination, demotion); and 
  • The employer acted with retaliatory intent. This element was often challenging to prove, creating hurdles for whistleblowers. 

The recent ruling eliminates the requirement for proving retaliatory intent. Now, an employee only needs to show that: 

  • They engaged in protected activity; 
  • Their employer took adverse action against them; and 
  • Their protected activity was a contributing factorin the adverse action. 

This shift in the legal landscape makes it easier for whistleblowers to prevail in SOX retaliation claims, potentially leading to an increase in such lawsuits, even when no malicious intent existed behind their actions. 

Next Steps 

Employers should review and adapt their practices to comply with this ruling and mitigate potential legal risks including: 

  • Reviewing internal procedures and policies to ensure they do not discourage protected activity or retaliate against employees who report concerns in good faith. 
  • Ensuring they have legitimate and documented reasons, unrelated to potential whistleblowing activity, before taking adverse action. 
  • Encouraging employees to report potential misconduct through safe and confidential channels. 
  • Training managers and supervisors on SOX protections, ensuring they understand their legal obligations and the importance of fostering an environment free from retaliation. 
  • Consulting with employment law attorneys to ensure compliance with SOX and navigate the evolving legal landscape. 

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.