On November 12, 2013, the United States Supreme Court heard oral argument in Lawson v. FMR LLC to decide whether Sarbanes-Oxley’s whistleblower protection extends to employees of a publicly traded company’s contractors. The Court’s decision is highly significant to employers because it will determine whether the whistleblower provision applies to the employees of the country’s roughly 5,000 public companies or, alternatively, to the employees of millions of private companies that simply happen to be contractors with public companies. The transcript of the oral argument can be found here.

During the argument, several of the justices questioned the propriety of the application of the statute to small “mom-and-pop” type private employers, indicating that the Court is uncomfortable with the broadly expansive approach advocated by the petitioners and the Department of Labor’s Administrative Review Board (“ARB”). Notably, the justices were able to obtain a limiting concession from the government during the hearing. Specifically, the government conceded that, at a minimum, only employees of contractors engaged in work connected with the public company could bring a claim. On the other hand, the petitioners’ counsel refused to agree to any limiting principle whatsoever.

While the petitioners have advocated deferring to the current ARB’s expansive view regarding the scope of SOX’s whistleblower provision, the questioning by the Justices did not indicate that the Court will decide the case on that basis.

We will report back to our readers as soon as the Court renders an opinion.