In a unanimous decision, the U.S. Supreme Court rejected an argument that would have made it harder for whistleblowers to prevail on retaliation claims under the Sarbanes-Oxley Act (“SOX”). The decision, Murray v. UBS Securities, LLC, No. 22-660, may be welcome news to whistleblowers, but as a practical matter, employers will likely not see a significant change in SOX whistleblower retaliation claims or awards.

Under SOX’s anti-retaliation provision, a publicly traded company may not “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against” a whistleblower who reports certain conduct to certain governmental authorities or supervisors. There are four elements in a plaintiff’s prima facie case: (1) the employee engaged in protected activity; (2) the employer knew of the employee’s protected activity; (3) the employee suffered an unfavorable personnel action; and (4) the employee’s protected activity was a contributing factor in the adverse action. Seybold v. Charter Communications, Inc., 2023 WL 7381438, at *2 (5th Cir. 2023). If the employee makes a prima facie case, SOX’s anti-retaliation provision provides that the employer then must show the personnel action would have been taken notwithstanding the employee’s protected activity.  

In 2022, the Second Circuit expanded the four prima facie elements by incorporating a sub-element to the “contributing factor” requirement. Murray v. UBS Sec., LLC, 43 F.4th 254, 258 (2nd Cir. 2022), holding that a whistleblower must also prove that the employer acted with “retaliatory intent” when taking the adverse action. The court’s ruling deviated from the Fifth and Ninth Circuits, which held that retaliatory intent is not an element of an employee’s prima facie case. Halliburton, Inc. v. Admin. Rev. Bd., 771 F.3d 254, 263 (5th Cir. 2014); Coppinger-Martin v. Solis, 627 F.3d 745, 750 (9th Cir. 2010). The Supreme Court sided with the Fifth and Ninth Circuits, holding that plaintiffs do not need to show retaliatory intent. 

The Murray decision likely will not significantly impact the SOX whistleblower retaliation landscape. The decision generally maintains the status quo—the Supreme Court endorsed the familiar four elements of a SOX retaliation prima facie case which have been embraced by a majority of courts for decades. Further, before employees can bring a SOX retaliation claim in federal court, they must first file a complaint with the Occupational Safety and Health Administration (“OSHA”), which may resolve the allegations administratively. According to the OSHA Investigator’s Desk Aid, the agency analyzes SOX retaliation claims using the standard four-element prima facie case that does not require retaliatory intent. The Supreme Court endorsed the framework, so the decision is unlikely to alter OSHA’s approach to handling SOX retaliation complaints. 

Regardless of whether Murray shifts SOX whistleblower behavior, the opinion is a good reminder for employers to review their whistleblower policies and practices. Employers can best position themselves against whistleblower retaliation claims by maintaining a strong anti-retaliation policy, ensuring that employment decisions are well documented and supported by legitimate, non-retaliatory business reasons, and applying policies and practices consistently.

Photo of Lindsay Burke Lindsay Burke

Lindsay Burke co-chairs the firm’s employment practice group and regularly advises U.S., international, and multinational employers on employee management issues and international HR compliance. Her practice includes advice pertaining to harassment, discrimination, leave, whistleblower, wage and hour, trade secret, and reduction-in-force issues arising…

Lindsay Burke co-chairs the firm’s employment practice group and regularly advises U.S., international, and multinational employers on employee management issues and international HR compliance. Her practice includes advice pertaining to harassment, discrimination, leave, whistleblower, wage and hour, trade secret, and reduction-in-force issues arising under federal and state laws, and she frequently partners with white collar colleagues to conduct internal investigations of executive misconduct and workplace culture assessments in the wake of the #MeToo movement. Recently, Lindsay has provided critical advice and guidance to employers grappling with COVID-19-related employment issues.

Lindsay guides employers through the process of hiring and terminating employees and managing their performance, including the drafting and review of employment agreements, restrictive covenant agreements, separation agreements, performance plans, and key employee policies and handbooks. She provides practical advice against the backdrop of the web of state and federal employment laws, such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, the Fair Labor Standards Act, and the False Claims Act, with the objective of minimizing the risk of employee litigation. When litigation looms, Lindsay relies on her experience as an employment litigator to offer employers strategic advice and assistance in responding to demand letters and agency charges.

Lindsay works frequently with the firm’s privacy, employee benefits and executive compensation, corporate, government contracts, and cybersecurity practice groups to ensure that all potential employment issues are addressed in matters handled by these groups. She also regularly provides U.S. employment law training, support, and assistance to start-ups, non-profits, and foreign parent companies opening affiliates in the U.S.

Photo of Evan Parness Evan Parness

Evan Parness has a full-service labor and employment practice that includes litigating cutting-edge issues at the trial and appellate levels, negotiating employment aspects of complex M&A deals and other business transactions, and counseling global employers on compliance with national, state, and local employment…

Evan Parness has a full-service labor and employment practice that includes litigating cutting-edge issues at the trial and appellate levels, negotiating employment aspects of complex M&A deals and other business transactions, and counseling global employers on compliance with national, state, and local employment laws and regulations.
Evan represents employers and senior executives in non-compete, harassment, discrimination, retaliation, ERISA, and business tort litigation in state and federal courts, administrative agencies, and alternative dispute resolution bodies. He has secured significant trial and appellate victories for clients, including complete dismissals of discrimination and retaliation lawsuits, successful verdicts following trial, and injunctive relief on behalf of clients enforcing restrictive covenants.

Evan also counsels established and emerging companies on compliance with federal, state, and local employment laws and regulations, and litigation avoidance measures in connection with all aspects of workplace employment issues. He conducts sensitive internal investigations of alleged discrimination and harassment, and assists employers in shaping workplace policies to comply with law and promote a productive working environment.

Evan advises leading companies on the labor and employment aspects of significant business transactions and acquisitions. He negotiates employment-related provisions in business transaction documents and oversees due diligence of a potential target’s employment practices. He also counsels clients on executive employment and restrictive covenants agreements.

Chambers USA notes “Evan is an exceptional and talented lawyer. He possesses a deep understanding of the law and an unwavering commitment to his clients. He has a keen eye for detail and can dissect complex legal issues with remarkable efficiency. His thorough and methodical approach to each case ensures that no stone is left unturned, providing his clients with the best possible legal representation.”

The Legal 500 US notes that clients have commented that “Evan Parness is an amazing attorney. Always attentive and will take instructions outside of business hours, he is always there when we need him and looks for the best outcome for clients.”

Photo of Carolyn Rashby Carolyn Rashby

Carolyn Rashby provides business-focused advice and counsel to companies navigating the constantly evolving and overlapping maze of federal, state, and local employment requirements. Carolyn’s approach is preventive, while recognizing the need to set clients up for the best possible defense should disputes arise.…

Carolyn Rashby provides business-focused advice and counsel to companies navigating the constantly evolving and overlapping maze of federal, state, and local employment requirements. Carolyn’s approach is preventive, while recognizing the need to set clients up for the best possible defense should disputes arise.

As a senior member of Covington’s Institutional Culture and Social Responsibility Practice Group, Carolyn has co-led significant investigations into workplace culture, DEI issues, and reports of sexual misconduct and workplace harassment.

As an employment lawyer with over two decades of experience, Carolyn focuses on a wide range of compliance and regulatory matters for employers, including:

  • Conducting audits regarding employee classification and pay equity
  • Advising on employment issues arising in corporate transactions
  • Strategic counseling on a wide range of issues including discrimination and harassment, wages and hours, worker classification, workplace accommodations and leave management, performance management and termination decisions, workplace violence, employment agreements, trade secrets, restrictive covenants, employee handbooks, and personnel policies
  • Drafting employment contracts and offer letters, separation agreements, NDAs, and other employment agreements
  • Advising on employee privacy matters, including under the California Consumer Privacy Act
  • Providing guidance on use of AI in the workplace and development of related policies
  • Leading anti-harassment and other workplace-related trainings, for employees, executives, and boards

Carolyn also works frequently with the firm’s white collar, privacy, employee benefits and executive compensation, corporate, government contracts, and cybersecurity practice groups to ensure that all potential employment issues are addressed in matters handled by these groups.