The U.S. Supreme Court has decided whistleblower protections apply not just to publicly traded companies but also to subcontractors that do business with them.
The justices voted 6-3 along non-ideological lines in a ruling that extends whistleblower protections to investment advisers, law firms, accounting firms and other such businesses working for public companies.
The court majority said the decision was in accordance with how the U.S. Department of Labor had interpreted the law for almost a decade. Justice Ruth Bader Ginsburg, writing for the majority, noted that Congress had enacted Sarbanes-Oxley after accounting problems brought down energy company Enron Corp and communications provider WorldCom Inc, calling those events the “mischief to which Congress was responding.”
The three dissenting justices said the ruling had a “stunning reach” that could give protections far beyond that, potentially even reaching household employees like babysitters.
The National Federation of Independent Business criticized the decision, saying in a statement that it gave plaintiffs’ lawyers “additional incentives to pursue aggressive litigation” against employers.
The justices were interpreting part of the Sarbanes-Oxley Act, the 2002 Wall Street reform law passed by Congress that sets standards for all U.S. publicly traded company boards, management and public accounting firms.