A 6-3 Supreme Court decision has reaffirmed the extension of whistleblower protections under the Sarbanes-Oxley (SOX) Act of 2002 to a public company's contractors and subcontractors.
SOX states that no "public company …, or any officer, employee, contractor, 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.
Even with the terms "contractor" and "subcontractor" in the law's language, a divided panel of the 1st Circuit Court of Appeals reversed a district court decision in Lawson v. FMR LLC et al. that recognized the rights of employees with contractors and subcontractors of public companies to be protected against retaliation.
Upon review, the Supreme Court reversed the circuit court, with Justice Ruth Bader Ginsburg writing the majority opinion, saying that the law made it clear that contractors and subcontractors came under the umbrella of the same law, and thus employees therein deserved equal protection under the law.
Justice Ginsburg also included law firms and accounting firms within the statute's purview, saying that "outside professionals bear significant responsibility for reporting fraud by public companies with whom they contract."