Supreme Court Solidifies Whistleblower Protections

A recent United States Supreme Court ruling in Murray v. UBS Securities, LLC has held that whistleblowers do not need to show retaliatory intent, or retaliatory animus, on the part of their employers in order to be protected under federal law, specifically under the whistleblower provisions of the Sarbanes-Oxley Act (SOX). The Act defines whistleblowing as “any lawful act done by [an] employee to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation [of enumerated laws]” or “to file, cause to be filed, testify, or otherwise participate in a proceeding filed or about to be filed (with any knowledge of the employer) relating to [such] an alleged violation.”[1] Whistleblowers are protected from retaliation by employers under federal law because of the important role they serve in combatting corruption and maintaining health, safety, and security, even when doing so requires taking action against their employer and, as such, risking their livelihood. It is for this reason that protections for whistleblowers, such as SOX, exist.

The SOX interpretation question in Murray brought before the Supreme Court was whether retaliatory intent must be proven for an individual to be protected under federal law. Trevor Murray was fired from UBS for refusing to skew his research reports on commercial mortgage-backed securities in favor of UBS’s business strategies despite being pressured to do so. A Manhattan federal jury found for Murray and awarded him $903,300 in damages. Upon appeal, the U.S. Court of Appeals for the Second Circuit overturned the award, arguing that SOX required whistleblowers to prove that their employer acted with retaliatory intent when firing them (something Murray had not explicitly proven). In a unanimous decision, the Supreme Court overturned this ruling, finding that the statutory text included no such intent requirement and that “showing that an employer acted with retaliatory animus is one way of proving that the protected activity was a contributing factor in the adverse employment action, but it is not the only way.”

Through the Supreme Court’s ruling, the majority of justices make clear that, while a whistleblower must prove their protected activity was a contributing factor in the employer’s unfavorable personnel action, there is no requirement a whistleblower show that their employer had retaliatory intent in terminating them, or otherwise issuing an unfavorable change in the terms and conditions of employment. As such, now, attorneys no longer need to prove that retaliatory intent for an act of whistleblowing was the primary reason for their whistleblower client’s termination, but only need to show that retaliation (even if not retaliatory intent) was a factor which influenced the termination. While it may be difficult for an employee to resolutely prove the primary reason for their termination, especially when an employer can point towards factors they can claim motivated an acceptable termination, by not requiring proof of retaliatory intent, the Supreme Court has made whistleblower protections more accessible as a pathway for wronged employees to advocate for themselves.

As a result of the Supreme Court’s ruling, employees may have an easier time demonstrating that their termination was due to retaliation following their whistleblowing complaints about alleged illegal actions undertaken by their employers.

The case is Murray v. UBS Securities LLC , case number 22-660, before the Supreme Court of the United States.

[1] https://www.whistleblowers.gov/statutes/sox_amended

This article is intended as a general discussion of these issues only and is not to be considered legal advice or relied upon. For more information, please contact RPJ Partner Ethan Krasnoo who counsels clients in areas of complex commercial litigation, arbitration, mediation and dispute resolution, and employment, intellectual property, and entertainment and media. Mr. Krasnoo is admitted to practice law in New York, the United States District Courts for the Southern and Eastern Districts of New York, the United States Court of Appeals for the Second Circuit and United States Tax Court.