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Supreme Court Update

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The U.S. Supreme Court began its new term on Monday, October 7, with several labor- and employment-related cases on the docket, including the highly anticipated Noel Canning case in which the Court will decide whether the President properly appointed members of the National Labor Relations Board using the recess appointments power.

Also on the docket is a lesser-known, but equally significant, case titled Lawson v. FMR, LLC. In the Lawson case, the Court is asked to decide whether the Sarbanes-Oxley Act’s whistleblower provision applies to employees of a publicly traded company’s private contractors or subcontractors, or only to the public company’s employees.

Sarbanes-Oxley (SOX) includes Section 806, which prohibits public companies from retaliating against an employee who engages in protected activity by reporting suspected fraud. This case will be the first time the Supreme Court has reviewed SOX, which was enacted in 2002 in the wake of Enron Corporation’s failure. In this case, the First Circuit ruled that although SOX protections would apply to publicly owned Fidelity mutual funds, they did not apply to employees of a separate advisory firm that manages the fund. The employees sought Supreme Court review of that decision.

SHRM’s amicus brief argues that the legislative history clearly shows that Congress intended SOX to apply only to publicly traded companies. In addition, the brief warns that an explosion of litigation would likely result from expanding SOX coverage from 4,500 publicly traded companies to those employed by some 6 million private entities in the United States, especially in light of the federal courts and agency struggle to attend to the current backlog of whistleblower retaliation claims.

Oral argument in the Lawson case is set for November 12, 2013.

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