Supreme Court to rule on scope of Dodd-Frank whistleblower protections

The Supreme Court announced Monday it will weigh whether corporate whistleblowers who don’t report wrongdoing to federal authorities are protected by anti-retaliation laws.

The high court will hear a San Francisco company’s appeal of a lower court ruling that it violated federal whistleblower protections in the Dodd-Frank Wall Street Reform Act when it fired Paul Somers, a former employee who reported a manager for hiding excessive spending.

The court decided unanimously to review the case in October, when their second session of the year begins.

{mosads}Digital Realty Trust is arguing that their dismissal of Somers didn’t violate the Dodd-Frank Act because Somers didn’t report the wrongdoing to the Securities and Exchange Commission. The 2010 law offers protection from firing and cash rewards to employees who report fraud or illegal activity at their firms.

A split panel of U.S. Court of Appeals for the 9th Circuit held that Somers was protected by the Dodd-Frank provision even though he didn’t report his boss’s action to the SEC. In its petition, Digital Realty Trust cited a similar recent case in which a 5th Circuit panel ruled a whistleblower wasn’t protected by Dodd-Frank since the person didn’t contact federal authorities.

A ruling in Digital Realty Trust’s favor could force whistleblowers to contact federal authorities before they internally report the illegal activity to reap federal protections.

The SEC set a record for whistleblower rewards in fiscal 2016. The agency awarded more than $57 million to 13 individuals who exposed wrongdoing within their own firms.