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Whistleblower Protection Extended

Posted by on May 18, 2014 at 12:25 AM

The Supreme Court recently made clear that the whistleblower protections of the Sarbanes-Oxley Act of 2002 apply not only to employees of public companies, but also to contractors and subcontractors of those companies. They stated that Congress intended for workers in a position to see, understand and report improper dealings, have the means to report without retribution. Given that there is no bright line between a contractor vs. a vendor, there could well be further litigation to shore up the definitions so that businesses can be clear on where SOX does and does not apply. The dissent, by Justice Sotomayor, while not addressing this issue, did point out that she was concerned with the reach of the majority opinion, saying in part, “Congress did not envision a system in which employees of other private businesses – such as cleaning and construction company workers who have little interaction with investor – related activities and who are ill suited to assist in detecting fraud against shareholders – would fall within §1514A. Nor, needless to say, did it envision §1514A applying to the household employees of millions of individuals who happen to work for public companies – housekeepers, gardeners, and babysitters who are also poorly positioned to prevent fraud against public company investors.”


This is a dramatic expansion of Sarbanes-Oxley to include millions more employees than previously thought. Contractors should begin training as soon as possible to ensure that they remain compliant with this ruling.

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