News & Events

Your Babysitter May Have Federal Whistleblower Protection!

Are you employed by a publicly-traded company?  If so, anyone who is employed by you – a babysitter, a gardener, a housekeeper, etc. – now has federal “whistleblower” protection.

So said the U.S. Supreme Court in the March 4, 2014 decision, Lawson v. FMR LLC. That means that you may not “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against” your employee “in the terms and conditions of employment because of” your employee’s “whistleblowing” activities – basically, calling your attention to anything that your employee “reasonably believes” amounts to a violation of any of the federal statutes covering mail fraud, wire fraud, securities fraud, or “any provision of Federal law relating to fraud against shareholders.”  The employee’s belief need not be correct.  Nor must she cite a particular statute.

These statutes are remarkably broad – one may commit mail fraud, for example, without mailing anything.  The bottom line is that, at least in theory, your babysitter has a federal lawsuit if you react negatively to her suggestion that Junior is illegally downloading music.

The Court was interpreting the “whistleblower” protection provision of Sarbanes-Oxley.  The fact that the section in question is titled “Whistleblower Protection for Employees of Publicly Traded Companies” did not dissuade the six Justices in the majority.  It was their view that the grammar of the section compelled the conclusion, title notwithstanding.

The real practical importance of Lawson is probably not the babysitter scenario, although the dissent made much of it.  Lawson held that the the “whistleblower” protection provision of Sarbanes-Oxley also applies to employees of “any contractor, subcontractor, or agent of” a publicly-traded company, and to employees of “any subsidiary or affiliate whose financial information is included in the consolidated financial statements of” a publicly-traded company.

Employment law just got a great deal more complex.

Robert ("Bob") M. Frey