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U.S. Supreme Court clarifies whistleblower law

In a February decision, the U.S. Supreme Court clarified who is entitled to receive whistleblower protection under the Dodd-Frank Act.

The issue for the court was whether Dodd-Frank shields employees who report wrongdoing to their employer but not to the Securities and Exchange Commission. Congress passed the Dodd-Frank Act in 2010 as part of Wall Street reform.

The justices ruled 9-0 that whistleblowers receive no protection under the law when they do not report the wrongdoing to the SEC. The court said Dodd-Frank is clear: it offers no protection from retaliation (such as firing or demotion) to employees who report claims of securities law violations only in-house.

Writing for the court, Justice Ruth Bader Ginsburg said, "The plain-text reading of the statute undoubtedly shields fewer individuals from retaliation than the alternative."

Facts of the case

The California case arose from an employee at a publicly traded real-estate trust who voiced concerns about improper actions allegedly taken by his supervisor.

The company fired the whistleblower, who was a vice president at the company. He then sued the company, alleging he was fired for reporting the supervisor's wrongdoing, which allegedly included hiding costs, removing internal controls and giving payments to friends.

The plaintiff argued that Dodd-Frank's intent was to protect individuals who blow the whistle, even if they do so only internally. Two lower federal courts agreed, but the Supreme Court overruled the prior decisions.

A spokesperson for the defendant company expressed appreciation for the court's decision, saying it brings clarity to Dodd-Frank for employers.

There may be other protections available to whistleblowers, but the Dodd-Frank Act is not one of them, unless the whistleblower went to the SEC.

Get answers to your questions

If you have any questions about state or federal whistleblower laws, speak with an attorney who has experience in this area of employment law.

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