The Supreme Court of the United States recently unanimously reversed the 2nd Circuit’s ruling on an employee asserting a retaliation claim under the Sarbanes-Oxley Act (“SOX”). Now, employees asserting a retaliation claim under SOX need to only show that their protected activity was a contributing factor in the adverse employment action. An employee does not have to prove that the employer had retaliatory or discriminatory intent to prove retaliation under SOX.

SOX, a federal law containing provisions that affect corporate governance, risk management, auditing and financial reporting of public companies, also establishes whistleblower protections for employees of publicly traded companies who report financial wrongdoing. Specifically, businesses covered by SOX are not allowed to “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment” when asserting rights under SOX.

In Murray v. UBS Securities, LLC, an employee claimed he was terminated for refusing to draft reports on commercial mortgage-backed securities. The employee stated that the reports were misleading and that he faced pressure from his employer to skew his research. The employer stated that the reason for termination was due to a reduction in force to cut costs. At issue on appeal was the standard of proof necessary for an employee to shift the burden to the employer.

In a unanimous decision, the Court rejected the employer’s argument that retaliatory intent was necessary, meaning an employee will not have to prove that the adverse employment action was motivated in response to the employee’s protected activity. Now, when an employee asserts a SOX whistleblower claim, the employee will only have to prove that their protected activity was a “contributing factor” in the adverse employment action. If an employee can prove this, then the burden shifts to the employer to show that it would have taken the adverse employment action regardless of the employee’s protected activity.

What Employers Need to Know

This ruling will likely lead to more SOX retaliation claims avoiding summary judgment and continuing to trial. To avoid retaliation claims, employers must continue to document all workplace issues and employment decisions in order overcome an inference of retaliation. Without appropriate documentation, it will be hard for employers to show that they did not engage in retaliatory conduct when making adverse employment decisions.