On February 8, 2024, the United States Supreme Court released a unanimous opinion confirming that a whistleblower does not need to show their employer’s actions were made with “retaliatory intent” to be protected under the Sarbanes-Oxley Act. The Sarbanes-Oxley Act prohibits publicly traded companies from retaliating against employees who report what they reasonably believe to be instances of criminal fraud or securities law violations. Retaliation under this statute, like many other federal statutes, includes any action to “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. The Court determined that Congress intended for an employee asserting such a whistleblower claim to have the burden to show their report of fraud or securities violations was a “contributing factor” to an employer’s actions against the employee to shift the burden of proof to the employer. But, the justices collectively rejected the need to prove the employer had retaliatory intent against the employee – clarifying the burden of proof for these claims rests firmly in a pro-employee direction.
In Murray v. UBS Securities, LLC, Trevor Murray filed a whistleblower action claiming UBS terminated his employment in violation of the Sarbanes-Oxley Act. Murray had worked as a research strategist where he had to certify—in accordance with applicable Securities and Exchange Commission regulations—his reports to UBS’ customers were independently produced and reflected his own views. Murray claimed UBS terminated him shortly after he informed his supervisor that two UBS trading desk employees were engaging in what he believed to be unethical and illegal efforts to skew his independent reporting. The jury found that Murray had established his claim and UBS had failed to prove it would have fired him even if he had not engaged in protected activity by making the report to his supervisor.
The former UBS employee had won a $900,000 jury verdict in 2017; but, it was reversed by the 2nd Circuit Court because he had not presented evidence of retaliatory intent by UBS. Now, according to the Supreme Court, a whistleblower does not have to prove their employer acted with “retaliatory intent.” Like other employment-related laws, whistleblower claims under this Act employ a burden-shifting analysis. The first part requires an employee to establish their “protected activity was a contributing factor” in the termination or whatever action the employee is claiming was retaliatory. If proven, the burden shifts to the employer to prove the employee’s termination (or other action taken) would have happened even if the employee had not engaged in any protected activity. Many courts had imposed a requirement for the employee to show intent in order to satisfy their initial burden; however, no more, because the Supreme Court has confirmed the employer’s “lack of ‘animosity’ is ‘irrelevant.’”
Any employer facing a retaliation claim needs to understand the law, and how this decision may impact defending such claims.
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