On February 8, 2024, the Supreme Court unanimously held that whistleblowers under the Sarbanes-Oxley Act (“SOX”) only need to show that their whistleblowing was a “contributing factor” to an employer’s retaliation against them (Murray v. UBS Securities, LLC). This decision, which overturned a lower court’s less whistleblower-friendly test, sends an unambiguous message that the judiciary is committed to protecting whistleblowers who report instances of securities fraud by their employers.
Trevor Murray was a research strategist at UBS Securities, where he was responsible for reporting information and trends about products available to UBS customers. Based on SEC regulations, Murray was obliged to provide an accurate and independent analysis. Despite these standards, Murray alleged that UBS leaders pressured him to report information that was more favorable to the business. After reporting his concerns about this “unethical” and “illegal” conduct to his direct supervisor, UBS terminated his employment.
In response, Murray filed a lawsuit alleging that UBS had violated SOX’s anti-retaliation provision, which prohibits employers from retaliating or discriminating against whistleblowers for reporting what they reasonably believe to be securities fraud. This reporting is sometimes referred to as “protected conduct,” and, to be actionable, the lower court had held that whistleblowers had to prove that an employer intended to retaliate against them.
The Supreme Court rejected this more difficult standard. Instead, the Court held that a whistleblower is only required prove that their protected complaints were a “contributing factor in the unfavorable personnel action.” Importantly, the protected activity does not need to be the sole – or even the biggest part of the decision making – so long as it was a factor. The burden is then on a company to show that it would have made the same decision even if the whistleblower did not engage in protected conduct.
The Supreme Court’s message is clear: there is a real judicial commitment to protecting people who speak up about what they reasonably believe to be illegal conduct in the workplace.
Here are three important takeaways:
- The Court’s use of the language “in any other manner discriminate” suggests that SOX is meant to protect against more than traditional notions of “adverse actions,” such as termination, demotion, and suspension.
- It does not matter if a company’s treatment of a whistleblower is motivated by ill will. A whistleblower’s protected conduct cannot be any factor of an adverse employment action – “not even a little bit.”
- In terms of the amount of information they possess, employees are typically at a severe disadvantage compared to their employer. The Court’s shifting of burden from whistleblower to employer protects employees from this information deficit. The Court’s recognition of this concern is hugely important for whistleblowers (and other employees).
If you are thinking about reporting fraud or blowing the whistle on your current or former employer, or if you’ve blown the whistle and been retaliated against, you can contact attorneys in Outten & Golden’s whistleblower and retaliation practice group.
