by On February 8, 2024, the U.S. Supreme Court unanimously held that an employee seeking to hold a publicly traded company liable for adverse personnel action due to the individual’s reporting of fraud does not need to prove that the employer had retaliatory intent. In the case decided by the Court, Murray v. UBS Securities, LLC, an employee alleged that his employer had fired him after he had reported what he believed to be illegal and unethical conduct by two traders. He won the case after a trial, but the decision was reversed upon appeal by the employer. The Second Circuit Court of Appeals found that the trial court should have instructed the jury that the employee needed to show that the employer had retaliatory intent in firing him. The employee appealed the appellate court reversal to the U.S. Supreme Court.
Publicly traded companies are prohibited from retaliating against employees who report what they reasonably believe to be instances of criminal fraud or securities law violations. The federal law known as the Sarbanes-Oxley Act says that no employer may “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of” the employee’s protected whistleblowing activity.
In deciding in favor of the employee in Murray v. UBS Securities, LLC, the Supreme Court held that the trial court had correctly instructed the jury that it only had to determine if the employee’s actions were a contributing factor in the employer’s decision to take adverse action. The Supreme Court emphasized that the law includes a burden-shifting process, not unlike the method applied in many discrimination cases, to determine if an employee’s adverse employment action was due to protected activity. Once the employee shows that the protected activity was a “contributing factor in the unfavorable personnel action,” the burden shifts to the employer to “demonstrate, by clear and convincing evidence, that the employer would have taken the same unfavorable personnel action in the absence of that behavior.” If the employer is unable to meet its burden, the employee succeeds in his claim.
