The U.S. Supreme Court has agreed to hear Murray v. UBS Securities, LLC, a case concerning the protections against retaliation for employee whistleblowers under the Sarbanes-Oxley Act of 2002. The legal issue involve whether the whistleblower bears the burden of proving that an employer acted with retaliatory intent or whether the employer bears the burden of proving that it had no intent to retaliate against the whistleblower.
History of the Case
Trevor Murray was a strategist in the mortgage strategy group of UBS Securities, a New Jersey-based broker-dealer. During the 2008 financial crisis, UBS laid him off as part of a reduction in force. UBS rehired him in 2011 and again laid him off in 2012, claiming another reduction in force.
Murray sued USB Securities and its parent company, UBS AG, claiming that they terminated his employment after he reported alleged fraud. He claimed that the company terminated him after he reported illegal attempts by colleagues to skew his independent research analysis. In his suit, he alleged that the company had violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s whistleblower protections and the Sarbanes-Oxley Act’s retaliation prohibitions.
The District Court Decision
In 2017, the U.S. District Court of the Southern District of New York found that Murray’s allegations about his colleagues engaging in wrongdoing were reasonable. The court further found that his whistleblowing contributed to his termination. On Murray’s Sarbanes-Oxley claim, a jury awarded him $653,000 in back pay and $250,000 in noneconomic compensatory damages.
The Second Circuit Decision
On appeal, the U.S. Court of Appeals for the Second Circuit reversed the District Court’s decision. It ruled that the law requires a whistleblower to show that their employer took adverse employment action against them with retaliatory intent.
In contrast, Murray argued that to prove his claim, he need only show that whistleblowing contributed to his termination. In its amicus brief, Public Citizen, a nonprofit consumer advocacy group, argued that the employer has the burden of proving that it would have taken action against the employee regardless of the whistleblowing activity.
Takeaways for Employers
Evidence of retaliation may exist in many ways and is not limited to a written decision stating that an employee was fired for whistleblowing. For instance, retaliation may occur if an employer shuns or isolates an employee, excludes them from business meetings, or treats them differently than other employees. Employers may be acting in retaliation if they remove an employee’s job responsibilities, fail to give them the information necessary to do their work, or place them on work performance improvement plans that are impossible to achieve.
As a result, HR professionals must be aware of the subtle ways that retaliation can occur and train management accordingly. Those who retaliate against whistleblowers, even in the smallest ways, must face the consequences. HR and management professionals should also treat whistleblowers with respect and investigate and respond to their concerns.
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