U.S. justices extend employee whistleblower protections

Tue Mar 4, 2014 1:20pm EST
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By Lawrence Hurley

WASHINGTON (Reuters) - The U.S. Supreme Court ruled on Tuesday that whistleblower protections apply broadly, saying that employees of subcontractors, including investment advisers, law firms and accounting firms, should also be protected from employer retaliation.

The justices voted 6-3 along non-ideological lines in a ruling that extends whistleblower protections beyond employees of publicly traded companies.

The three dissenting justices said the ruling had a "stunning reach" that could give protection to household employees like babysitters.

The justices were interpreting part of the Sarbanes-Oxley Act, the 2002 Wall Street reform law passed by Congress that sets standards for all U.S. publicly traded company boards, management and public accounting firms.

Lawyers representing public companies warned that the ruling expands the scope of the provision from roughly 5,000 companies to several million, including small businesses.

"That's not what Sarbanes-Oxley was about," said Lloyd Chinn, a lawyer at the Proskauer law firm in New York, saying that the law was only intended to protect investors in public companies.

The court majority said the decision was in accordance with how the U.S. Department of Labor had interpreted the law for almost a decade.

Justice Ruth Bader Ginsburg, writing for the majority, noted that Congress had enacted Sarbanes-Oxley after accounting problems brought down energy company Enron Corp and communications provider WorldCom Inc, calling those events the "mischief to which Congress was responding."   Continued...

A general view of the U.S. Supreme Court in Washington December 3, 2013. REUTERS/Jonathan Ernst