Which employees get securities whistleblower protection? Supreme Court to resolve disagreement

Which employees get securities whistleblower protection? Supreme Court to resolve disagreement

Dive Brief

The U.S. Supreme Court has agreed to review Somers v. Digital Realty Trust Inc., a case in which the 9th Circuit ruled that employees who complain internally about securities law violations are protected from retaliation.

The appeals court held that workers can qualify as “whistleblowers” under the Dodd-Frank Wall Street Reform and Consumer Protection Act, even if they never submit their complaints to the U.S. Securities and Exchange Commission (SEC) as the law discusses.

The 2nd Circuit reached the same conclusion in 2015 but the federal appellate courts are divided; the 5th circuit ruled in 2013 that employees must file a complaint with the SEC to receive the law’s anti-retaliation protections.

Dive Insight

Many employers are hoping the Supreme Court will conclude that employees must report complaints to the SEC to obtain protection, according to the U.S. Chamber of Commerce. In a statement submitted to the Court, the business advocacy organization said that a finding otherwise would drastically expand the number of employees eligible to pursue the law’s remedies and the time in which they can sue for retaliation.

A handful of other experts, however, have said that such a finding will discourage employees from reporting violations internally, thereby denying employers the opportunity to address the issue first.

Either way, employers should have clarity on the issue in the next few months. In the meantime, businesses may want to review internal policies and agreements to ensure they don’t run afoul of SEC whistleblower rules, as the commission has recently demonstrated a new interest in the issue.