In a case reviewing a First Circuit panel’s ruling that only employees of public companies are covered by the whistleblower provisions of the Sarbanes-Oxley Act, the National Whistleblower Center filed an amicus brief urging the Supreme Court to give Chevron deference to the Department of Labor’s holding that contractors and subcontractors are also covered under the term employee under the provisions. The case is set for oral argument on November 12, 2013. Lawson v. FMR, LLC,. No. 12-3.
Congress vested exclusive jurisdiction in the DOL to administer the whistleblower provisions in Section 806 of Sarbanes-Oxley, said the brief. Within the context of this authority, the DOL has consistently interpreted the term employee broadly to encompass contractors and subcontractors. Further, noted the brief, this interpretation has been in place for decades and has not been challenged by Congress or overturned judicially.
If the Court did not give deference to the DOL interpretation of employee and decided that the whistleblower protections do not extend to contractors and subcontractors, the brief warns that this would create a massive loophole that was not intended by Congress when it passed Sarbanes-Oxley. Even more, not giving deference to the DOL in this matter would create dubious incentives for companies engaged in misconduct to hire contractors and subcontractors to handle some of their more legally questionable work.