Last month, the United States Supreme Court issued a ruling that provided for more protection for whistleblowers that work for private contractors of public companies in Lawson v. FMR. The six to three decision expanded the protections of the federal Sarbanes-Oxley Act of 2002, which was established to promote accountability from publicly traded companies following a wave of scandals around that time.
In Lawson, Jackie Hosang Lawson was employed as a Senior Director of Finance for Fidelity Brokerage Services, LLC. Fidelity Brokerage was related to the mutual fund corporation, Fidelity. Lawson eventually objected to the financial reporting practices of FMR, LLC, which was a Fidelity mutual fund advisor. In a whistleblower filing that she submitted to the Occupational Safety and Health Administration, which reviews Sarbanes-Oxley claims, Lawson argued that due to her objections, she suffered retaliation and was forced to resign. The case eventually went before the First Circuit, where Fidelity argued that Sarbanes-Oxley's protections were meant to apply only to the employees of public companies, not their private contractors. The First Circuit agreed, in a divided opinion, and Lawson petitioned the Supreme Court.
The Sarbanes-Oxley Act states that "[n]o public company... or any... contractor of such company may [retaliate] against an employee... because of [a Sarbanes-Oxley protected activity]." However, a decision issued later by the Department of Labor's Administrative Review Board (ARB) found that the employee of a contractor who acted as a whistleblower against a public company also received protection under the Act. The problem was that "employee" under the Act had no definition. In reading the rest of the Act, it was possible to come up with two definitions: one that applied just to employees of public companies, and another that applied to employees of contractors and agents.