Private Companies & Whistleblowers

on April 21, 2014 by James Hunt

SFTH 11In Lawson v. FMR LLC, the U.S. Supreme Court expanded whistleblower protections to private companies. More specifically, the Court held that the anti-retaliation protections of the Sarbanes-Oxley Act apply to employee whistleblowers of private companies that contract with public companies.

Public companies are familiar with the provisions of Sarbanes-Oxley. Private companies that contract with public companies must educate themselves about the anti-retaliation provisions that prohibit them from threatening, demoting, firing or otherwise retaliating against any employee who reports illegal or improper conduct.

The Supreme Court ruled that the term “employee” in the anti-retaliation provision includes both public and private employees. The majority opinion reasoned that the Enron scandal occurred in part by the failure of private contractors, lawyers and accountants to report improper conduct.

What should private companies do? A few steps for private companies to consider in addressing the Lawson impact on their business include:

  • Determine whether your company is subject to the Sarbanes-Oxley anti-retaliation protections.
  • Review your internal whistleblower policies and confirm you are prepared to handle whistleblower complaints
  • Create requirements for handling adverse personnel decisions, including investigating complaints, documenting the reasons for the decision, and conducting exit interviews
  • Ensure that your human resources department understands the whistleblower provisions and provides training on anti-retaliation issues, if needed

If have questions regarding how the Lawson decision may impact your private company or whether you need to update your whistleblower policies, schedule an appointment with the attorneys at Slater, Tenaglia, Fritz & Hunt.

Slater, Tenaglia, Fritz & Hunt, P.A. is a full service law firm.  Our practice focuses on commercial litigation and personal injury matters.  For over 35 years, we have been providing superior legal counseling and representation to institutional clients, including Fortune 500 Corporations and individuals throughout New York, New Jersey, Pennsylvania and nationally. We can be contacted by phone: (201) 820-6001 or (212) 692-0200 and we can also be found on the Internet, LinkedIn, Twitter, Google+, Youtube and on Facebook. We also have a network of local counsel throughout the United States. All initial consultations are free.