An employee discovered that his boss was violating security procedures. Instead of rushing to report it to the Securities and Exchange Commission, he first alerted the company executives so they could handle the situation. As a result, he was fired. Does this case count as whistleblower retaliation?
The Supreme Court is asking that same question this week. The ex-employee in this case brought a retaliation lawsuit against the company, Digital Realty, which could change the way whistleblowers report violations.
The main conflict lies in the wording of the Dodd-Frank act, which is the law that prevents companies from seeking revenge against whistleblowers. Digital Realty asserts that the act requires employees to first testify to the S.E.C. in order to receive whistleblower protections. However, the ex-employee believes that the law implies that reporting to employers should also activate this safeguard against termination.
Congress wrote the Dodd-Frank act so that workers who suspect that their company broke the law can tell the truth without fear for their job. Companies can’t take direct action against whistleblowers, such as pay cuts, demotions and termination. Without whistleblower protection laws, employees are more likely to keep violations secret or even lie in court.
If the court sides with the ex-employee, companies would have to abide by the Dodd-Frank act even for internal reports. Workers would have the same protections regardless of whether they contact the government first.
However, if the court rigidly applies the exact wording of the law, businesses may lose their chance to fix legal security violations before federal agents are involved. In order to receive protection, workers would skip internal reporting.
Although the Supreme Court has not yet reached an official interpretation, this clarification will likely affect future whistleblower cases. Because precise wording of these laws can greatly affect whistleblower protection and retaliation, both employees and companies facing retaliation claims should seek legal guidance.