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The Supreme Court and Congress Are Thinking About Whistleblower Protection — Are You?




by:
Goldberg Segalla LLP - Buffalo Office

 
March 19, 2014

Previously published on March 17, 2014

Recent activity at the federal level — including a U.S. Supreme Court decision this month and an increase in congressional funding for the Occupational Safety and Health Administration (OSHA) — points to greater protection for employees who report wrongdoing or violations by their employers. With such high-level attention being paid to whistleblower protection by the judiciary, regulators, and lawmakers, these developments should serve as a reminder to all companies to ensure that proper policies and procedures are in place for handling whistleblower complaints.

Highest Court Extends Whistleblower Provision of Sarbanes-Oxley

On March 4, the U.S. Supreme Court held that the whistleblower protection provision of the Sarbanes-Oxley Act extends to cover not only employees of public companies, but also employees of private companies that contract with public companies.

The provision — entitled “Whistleblower Protection for Employees of Publicly Traded Companies” — states:

No [public] company - or any officer, employee, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [whistleblowing and other protected activity]. (18 U.S.C. § 1514A[a])

In Lawson v. FMR LLC, the Supreme Court, in a 6-3 decision, held that “the provision shelters employees of private contractors and subcontractors, just as it shelters employees of the public company served by the contractors and subcontractors.” In a vigorous dissent, Justice Sotomayor opined, “[t]he majority’s interpretation transforms § 1514A into a sweeping source of litigation that Congress could not have intended.”

OSHA Tasked by Congress to Protect Whistleblowers

Meanwhile, the Occupational Safety and Health Administration has been tasked by Congress to enforce the whistleblower provisions of 22 different statutes. These laws protect workers in many industries throughout the country from retaliation when they report unsafe working conditions, fraud, or something that would endanger the public.

As noted recently on Goldberg Segalla’s OSHA: Legal Developments and Defense Strategies blog, the Department of Labor reports that since 2009 the number of new whistleblower cases has grown by 37 percent. The federal government has responded to this increase by providing additional resources in the fiscal 2015 budget. With these funds, OSHA plans on hiring additional whistleblower investigators, and other employees who will handle OSHA’s training, statistical analysis, IT development, and auditing functions.

Reporting injuries is a protected activity and a basic worker right under the Occupational Safety and Health Act of 1970. OSHA believes that if injuries aren’t reported, then hazards can’t be identified and corrected. In 2013, OSHA helped to award more than $24 million to whistleblowers across the country who had been retaliated against by their employers for exercising their rights. (To learn more about OSHA’s Whistleblower Protection Program, visit whistleblowers.gov.)

Impact: Time to Put Policies and Procedures in Place

Whether or not Justice Sotomayor’s dissent proves prophetic, and considering the increased funding OSHA has at its disposal for investigating whistleblower claims, the Lawson decision is a reminder to all companies — whether public or private — to ensure that proper policies and procedures are in place for preventing and handling whistleblower complaints.

An ounce of prevention in this regard is truly worth a pound of cure. Review and update your existing compliance and anti-retaliation policies. Train, and re-train, supervisors and staff on the content and importance of these policies. Create a culture of compliance by nurturing open lines of communication for internal reporting. Plan ahead by establishing a complaint response team and protocol for handling internal investigations. A tailored set of best practices, followed with discipline, will minimize the risk of whistleblower retaliation claims and help your company weather an increasingly onerous regulatory environment.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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