Whistleblowers need not prove ‘retaliatory intent,’ SCOTUS holds
Feb. 12, 2024
The decision in favor of a former UBS employee could lead to more whistleblower retaliation claims under the Sarbanes-Oxley Act, an attorney told HR Dive.
Dive Brief:
Employees who invoke the whistleblower protections of the Sarbanes-Oxley Act in the event of an unfavorable personnel action need not prove that their employer acted with retaliatory intent, a unanimous U.S. Supreme Court held Thursday.
In the decision, Murray v. UBS Securities, LLC, Justice Sonia Sotomayor wrote that the 2nd U.S. Circuit Court of Appeals erred when it held a former research strategist for financial services firm UBS had to prove retaliatory intent to show that his firing violated the law. The former employee alleged that he was fired after reporting that he was pressured to change his reports to be more supportive of UBS’ business strategies.
The Sarbanes-Oxley Act’s statute “does not reference or include a ‘retaliatory intent’ requirement,” Sotomayor said, “and the provision’s mandatory burden-shifting framework cannot be squared with such a requirement.” The high court reversed and remanded the case for further proceedings.
Dive Insight:
The court’s decision may make it easier for litigants bringing claims under the Sarbanes-Oxley Act to satisfy their burden of proving that whistleblower conduct was a contributing factor in an adverse employment action, Katie Reynolds, associate at Fisher Phillips, told HR Dive in an email.
“On a small scale, this decision may lead to more [Sarbanes-Oxley] whistleblower retaliation claims brought against [employers],” Reynolds said. “But this decision also will likely be the basis for courts interpreting other whistleblower protection statutes that require the same, or similar, burden shifting framework leading to more whistleblower retaliation cases under these statutes.”
Reynolds added that employers should have documentation on hand to support adverse employment decisions.
While the act of whistleblowing may have a negative connotation in the business community, some have questioned why. Sources who previously spoke to HR Dive argued that policies which encourage potential whistleblowers to speak up may be a positive for organizations in the long run.
For example, a 2018 study by researchers at the University of Utah and George Washington University found that higher internal whistleblower report volume was associated with fewer fines and lawsuits.
[CFO Dive]
