Retaliatory intent does not need to be demonstrated according to the United States Supreme Court when a whistleblower brings an action against an employer based on a violation of the Sarbanes Oxley Act. The House Workforce Protections Subcommittee held an oversight hearing on the Department of Labor’s Wage and Hour Division. The Department of Labor updated the civil monetary penalties for violations of the laws that it enforces.

Whistleblower Doesn’t Need to Prove Retaliatory Intent – By unanimous decision, the United States Supreme Court ruled in the case of Murray v. UBS Securities that Section 1514A of the Sarbanes-Oxley Act of 2002, which protects whistleblowers does not require an employee to prove retaliatory intent. The decision by Justice Sotomayor concluded that “While a whistleblower bringing a §1514A claim must prove that his protected activity was a contributing factor in the unfavorable personnel action, he need not also prove that his employer acted with retaliatory intent.”

The Sarbanes-Oxley Act was passed following the Enron scandal and includes a whistleblower protection that states employers cannot “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.” The law established a burden shifting framework requiring the whistleblower to demonstrate that protected activity was a contributing factor in the unfavorable personnel action and where this occurs, the employer then needs to show that “it would have taken the same unfavorable personnel action in the absence of” the protected activity.

Trevor Murray worked as a research strategist at UBS, a securities firm. He was responsible for reporting on the commercial mortgage-backed securities business. Securities and Exchange Commission (SEC) regulations required him to certify that his reports were produced independently and accurately reflected his own views. Murray contends that two trading desk leaders pressured him to produce reports to be more supportive of their business strategies.  He advised his supervisor who eventually told him to “write what the business line wanted.” The employer subsequently terminated Mr. Murray resulting in this lawsuit. Following an adverse decision, UBS appealed to the United States Court of Appeals for the Second Circuit, which vacated the verdict and remanded the case for a new trial since it believed that the employee needed to prove retaliatory intent. The Second Circuit’s ruling created a conflict with the Fifth and Ninth Circuits leading to review by the Supreme Court.

Justice Sotomayor found that “When an employer treats someone worse—whether by firing them, demoting them, or imposing some other unfavorable change in the terms and conditions of employment—because of the employee’s protected whistleblowing activity, the employer violates §1514A. It does not matter whether the employer was motivated by retaliatory animus…”  She noted that the statute established that the contributing-factor burden shifting framework is what should be applied to whistleblower claims.

Hearing Held on the Wage and Hour Division – The Subcommittee on Workforce Protections of the House Committee on Education and the Workforce held an oversight hearing “Examining the Policies and Priorities of the Wage and Hour Division.” Representative Kevin Kiley (R-CA), chair of the Subcommittee urged the Wage and Hour Division “to withdraw the proposed overtime rule, stop the final independent contractor rule before it takes effect, and rethink any regulation that negatively impacts American workers, job creators, and small businesses.”

Jessica Looman, Administrator of the Wage and Hour Division (WHD) testified and outlined the different laws that the WHD administers and enforces noting that these laws “protect more than 165 million workers in more than 11 million workplaces throughout the United States and its territories.” Among the Fiscal Year 2023 highlights that she outlined was the recovery of over $274 million in back wages and damages for more than 163,000 workers throughout the country, with 84% of the monetary recoveries resulting from overtime violations. Additionally, the WHD undertook more than 4,500 outreach events to provide compliance assistance and workers’ rights information to more than 450,000 employers and workers while receiving more than 988,000 calls from workers and employers.

Ms. Looman reviewed the final rule, effective on March 11th, that revises the guidance on determining whether a worker is an employee or independent contractor. She believes that the “updated rule aligns the Department’s approach with how courts determine whether a worker is an independent contractor or employee under the Fair Labor Standards Act. The Department’s new rule recognizes that independent contractors in business for themselves play an important role in the economy, and it provides businesses with a consistent approach to analyze if a worker is properly classified as an independent contractor.” She concluded that the new rule would reduce the risk of employees being misclassified as independent contractors. In his opening statement, Representative Kiley announced that he will be introducing a “resolution of disapproval under the Congressional Review Act to nullify this harmful rule and stop DOL from this nationwide attack on the American workforce.” Senator Bill Cassidy (R-LA), ranking Republican on the Senate Health, Education, Labor, and Pensions Committee announced he will introduce a similar resolution in the Senate to repeal the independent contractor rule. Litigation challenging the rule is also pending.

DOL Raises Civil Monetary Penalties – The Federal Civil Penalties Inflation Adjustment Improvements Act requires federal agencies to adjust their monetary penalties for inflation by January 15^th of each year. The Department of Labor published  the 2024 monetary penalties that became effective on January 16^th. The maximum penalty for violation of the minimum wage and maximum hours provisions of the Fair Labor Standards Act increased effective January 16^th from $2,374 to $2,451. Failure to display required posters would result in a $211 penalty, an increase of $7 from 2023. Penalties for different violations of the Occupational Safety and Health Act could result in a maximum penalty of $16,131, which is an increase from $15,625 in 2023.

Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.