As a matter of first impression, the United States Court of Appeals for the First Circuit recently considered whether § 1514A(a) of the Sarbanes-Oxley Act (SOX) applies to those employed by a contractor or subcontractor of a public company. In Lawson v. FMR LLC, the First Circuit concluded that “only the employees of the defined public companies are covered by these whistleblower provisions…” – and not the employees of a contractor or subcontractor of that public company.

In Lawson, the plaintiffs sued their former employers, which were private companies that provided advisory or management services by contract to a publicly traded company. Plaintiff Zang was discharged after raising concerns about inaccuracies in a registration statement for certain Fidelity funds. As a result, Zang filed a complaint with the Occupational Safety and Health Administration (OSHA) alleging unlawful retaliation under § 1514A(a) of SOX. OSHA dismissed Zang’s complaint finding that he was a covered employee within the meaning of § 1514A(a) and was “covered” by the whistleblower protections, but that he had not engaged in protected activity under that subsection. On appeal, the Administrative Law Judge (ALJ) dismissed the action finding that Zang was not a covered employee under § 1514A(a). Zang appealed the ALJ’s decision in federal court.

Plaintiff Lawson filed a similar complaint with OSHA while she was still employed and alleged that she was retaliated against for raising concerns about cost accounting methodologies. Thereafter, she resigned and claimed that she was constructively discharged. Before OSHA could rule on her claims, Lawson informed OSHA that she would seek review of her SOX claim in federal court. Although both plaintiffs filed separate complaints with OSHA and in federal court, the district court addressed both cases in a single order because the two claims shared a common defendant and raised the same question of law under § 1514A(a).

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