In the upcoming Supreme Court term, a pivotal employment case is on the docket: Murray v. UBS Securities, LLC. This case will dissect and evaluate a key element of the Sarbanes-Oxley Act (SOX), specifically regarding whistleblowers. The big question at stake? Just how much evidence does a whistleblower need to provide to be shielded under the law.
Congress passed SOX in 2002 to protect employees who spot and report wrongdoing in publicly traded companies. It ensures that these employees will not face workplace discrimination for their actions and allows them to claim compensation or job reinstatement if they feel their rights have been infringed upon. If a whistleblower wants to stake a SOX claim, they may file a complaint with the Secretary of Labor, who then checks it against a standard measure of proof.
This standard requires the whistleblower to demonstrate that their actions were a “contributing factor” in any negative job consequences they faced. Courts, however, have diverged on whether or not a whistleblower must prove that their employer acted with retaliatory intent. Some courts, like the Fifth Circuit, have said that whistleblowers do not have to prove an employer’s retaliatory intent to make a SOX claim. They view “contributing factor” as a low burden of proof which simply requires a whistleblower to show that their whistleblowing in some way affected the employer’s decision to take an adverse action. The higher burden of proof then falls on the employer to prove that the same outcome would have happened regardless of the employee’s whistleblowing.
On the other hand, the Second Circuit, which ruled in favor of UBS Securities, holds that words like “discrimination” and “because of” in the statute imply a prejudiced action and a cause-and-effect relationship between whistleblowing and negative consequences. In so holding, the Second Circuit parts ways from other circuits and requires SOX claimants to prove a retaliatory motive on their employer’s part.
The National Whistleblower Center (NWC) contends in an amicus brief in support of the whistleblower Trevor Murray that Congress designed the law to lessen the proof threshold. Particularly, NWC claims that Congress aimed to eradicate the need to prove intent for whistleblowers under SOX and similar statutes. This carefully-calibrated burden-shifting scheme, said the NWC, deviates from conventional proof obligations in employment cases to favor whistleblowers in retaliation incidents.
In a separate amicus brief, the federal government agrees with the NWC, underscoring specific language within the statute such as “behavior” that, in their view, negates the need to demonstrate retaliatory intent. In agreement, Senators Chuck Grassley and Ron Wyden, Chairman and Vice-chairman of the bipartisan U.S. Senate Whistleblower Protection Caucus, criticize the lower court in their brief for ignoring entirely the section of SOX that addresses the very burden of proof in whistleblower cases.
Why does this case matter? Well, the Supreme Court’s decision won’t just affect SOX. Many federal whistleblower laws have similar proof requirements. If the Court decides a whistleblower has to prove revengeful intent under SOX, then those making complaints under related laws will face the same challenge. So keep an eye on this case—it's ripples could spread far and wide.