"The cover-up is often worse than the crime" – an apt mantra for employers who are being increasingly forced to defend retaliation and/or whistleblower claims brought in myriad industries under a broad spectrum of federal and state laws.

The United States Supreme Court's recent (and landmark) decision in Lawson v. FMR LLC, broadly expanding the scope of potential whistle-blower claims under the Sarbanes-Oxley Act of 2012 (SOX), highlights employers' enlarged whistle-blower-related exposure.  The Lawson decision meaningfully enhances the number of employees who may seek to bring suit under the SOX whistle-blower provision.  Passed in 2002 on the heels of the Enron scandal, SOX prohibits retaliation against employees who report specific violations of SEC regulations and/or other forms of shareholder fraud.  Based on statutory language, up until Lawson, employers generally operated under the belief that it applied only to employees of publicly-traded companies. 

Not so.  In Lawson, writing for a 6-3 majority, Justice Ginsburg held that the SOX anti-retaliation provision applies not only to employees of publicly-traded companies, but also to employees of non-public companies that provide work for public companies.  Justice Ginsburg reasoned that prohibiting retaliation under SOX against non-public company employees furthered Congress' overarching "aim" of SOX, which was to "safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corp."  

By so holding, the United States Supreme Court unquestionably expanded SOX whistle-blower coverage and stoked fears that a new wave of SOX whistle-blower litigation is imminent.

In addition to expanded SOX whistle-blower coverage, employers throughout the country face whistle-blower-related exposure under various federal statutes such as the Dodd-Frank Act (in the financial services sector), OSHA, the Fair Labor Standards Act, and the Family and Medical Leave Act, as well as numerous state and local civil rights, discrimination and/or public safety statutes.  In this evolving area of law, it is incumbent upon employers to carefully analyze their internal compliance practices for receiving and investigating all types of whistle-blower complaints.  Human Resources representatives and key members of management – in publicly- and privately-held companies – must be trained regarding the broad range of whistle-blower laws and how to recognize and respond to the various forms of protected whistle-blower complaints, which might arise in the workplace.