From how far off can the lonesome whistleblower blow? That is a question that will be taken up by the U.S. Supreme Court in its new session.
Lawson v. FMR, LLC raises the question: Does the Sarbanes-Oxley Act's whistleblower provision cover employees of a publicly traded company's private contractors or subcontractors — or just the public company's employees?
It's an important distinction, since contracting is a growing trend these days, and many contractors, for various reasons, have inside knowledge of what's going on inside the public company.
Recommended For You
Sarbanes-Oxley, notes the Society for Human Resource Management, prohibits public companies from retaliating against an employee who engages in protected activity by reporting suspected fraud. But how far removed from the public entity does the protection extend?
SHRM is all over this one, having filed a brief with the court in support of a sub that argues the protection does not extend beyond the public company employees.
SHRM notes that this case is the first opportunity for the big court to review Sarbanes-Oxley, which almost seems impossible in this age of nonstop litigation.
When the Lawson case, brought by a group of battered whistleblowers employed by a contractor, got to the district level, the court said, "You're not covered." The workers took it to the Supreme Court for review.
"SHRM's amicus brief argues that the legislative history clearly shows that Congress intended SOX to apply only to publicly traded companies.
"In addition, the brief warns that an explosion of litigation would likely result from expanding SOX coverage from 4,500 publicly traded companies to those employed by some 6 million private entities in the United States, especially in light of the federal courts and agency struggle to attend to the current backlog of whistleblower retaliation claims," SHRM said, explaining its supportive brief.
Now it'll be up to the Supreme Court to decide how distant the whistle may be blown from the public company.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
