Supreme Court Decision Solidifies Whistleblower Protections

The Supreme Court ruled unanimously that UBS Securities must pay $900,000 in back-pay to a former analyst who filed a claim against the company, asserting that he should have been afforded whistleblower protection.

Trevor Murray, a former research analyst at UBS, sued the firm in 2012 claiming that he was fired after informing his supervisor that two leaders of the UBS trading desk were engaging in what he believed to be unethical and illegal efforts to skew his independent reporting. He originally won $903,000 in 2017 after a district court ruled in his favor however, that ruling was later overturned in 2022 by the Second Circuit court finding that fired whistleblowers suing under SOX must show that their employer acted with retaliatory intent when firing them.

Murray brough this claim under the Sarbanes-Oxley Act (SOX) which prohibits “publicly traded companies from retaliating against employees who report what they reasonably believe to be in- stances of criminal fraud or securities law violations.” The Act specifically provides that employers may not “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of” protected whistleblowing activity.

As a result of the Court’s decision, the justices ultimately rejected the argument that a sperate finding of retaliatory intent is required for whistleblower protection under SOX. The Court has exhibited that in the context of whistleblower protection under SOX, plaintiffs merely need to demonstrate that their protected activity was a determining factor in their employer’s decision to fire them. After establishing this, the burden of proof shifts to the employers to prove that they would have taken the same action even in the absence of the employee’s protected activity.

The Court supported its decision by examining the purpose of the Whistleblower Protection. “The contributing-factor burden-shifting frame- work is meant to be plaintiff-friendly,” Justice Sotomayor said in her written opinion for the Court. “Showing that an employer acted with retaliatory animus is one way of proving that the protected activity was a contributing factor in the adverse employment action, but it is not the only way.”

“This is a huge victory for whistleblowers all across the country, not only corporate whistleblowers seeking relief under Sarbanes-Oxley, but all those seeking damages for retaliation under the dozen government and nongovernment whistleblower-protection laws structured in exactly the same way,” said Murray’s attorney Robert Herbst.

What Does This Mean for Companies Going Forward?

Now that the Supreme Court has showed that retaliatory intent is not necessary in employee whistleblower claims under SOX, the employer is no longer given the upper hand. The Court has inherently lowered the standard for all employees now that employers cannot simply provide some non-retaliatory reason for the action they took.

Due to this impactful decision, companies will now be forced to review their compliance and whistleblower protections. as they must be cautious in their treatment of employees who engage in whistleblowing activities. In essence, the ruling demonstrates that companies must prioritize dedicating additional time and resources to ensure that employees are not subjected to discrimination for engaging in whistleblower activities.  

Jacob Horowitz is a contributing editor at Compliance Chief 360°