SCOTUS Limits the Definition of “Whistleblower” Under the Dodd-Frank Act

Recently, the U.S. Supreme Court unanimously stated that a “whistleblower” under the Dodd-Frank Act is someone who reports suspected securities law violations to the Securities and Exchange Commission (“SEC”). The Dodd-Frank Act is a federal law intended to prevent abusive financial service practices, and protects whistleblowers from retaliation for reporting violations.

In Digital Realty Trust, Inc. v. Somers, an employee internally reported possible securities violations, and was fired shortly thereafter. The employee claimed he was retaliated against for whistleblowing. However, because he did not report the alleged violations to the SEC, the Supreme Court stated that he was not entitled to protected whistleblower status under Dodd-Frank.

While this case may seem appealing to employers, companies must still take care to avoid retaliation against employees. Specifically, other federal or state protections may protect internal whistleblower complaints. Additionally, this decision may cause employees to report misconduct to the SEC in order to access the Dodd-Frank Act whistleblower protections, rather than first reporting the issue internally within the company. Ultimately, it is best practice for employers to take all complaints seriously and treat employees fairly.