SCOTUS Decision Digital Realty-Somers Whistleblower Protections

Supreme Court Action and Whistleblower Protections  

Concerning Whistleblower Protections – 0n February 21, 2018, the Supreme Court held in Digital Realty Trust, Inc. v. Somers that to sue under the anti-retaliation provisions of the Dodd-Frank Act, a person must first report a violation of the securities laws to the Securities and Exchange Commission (SEC). In reversing a prior Ninth Circuit decision, the Supreme Court ruled that employees who report alleged violations only internally are not protected whistleblowers under Dodd-Frank but are protected only if they have reported to the SEC.

The Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) strengthened SEC enforcement by providing monetary awards and anti-retaliation protections to “whistleblowers” who report on securities law violations. The statute unambiguously provides monetary awards to people who report to the SEC. However, the issue in Digital Realty was the extent of anti-retaliation protections that restrict employers from firing, demoting, harassing or otherwise discriminating against a “whistleblower.”

The Dodd-Frank Act defines a “whistleblower” as someone who provides “information relating to a violation of the securities laws to the Commission.” While that definition seemingly only protects those who report to the SEC, the Dodd-Frank Act separately provides protection for whistleblowers who make disclosures consistent with other federal laws that do not require disclosure to the SEC, including the Sarbanes-Oxley Act.

Digital Realty Trust, Inc. v. Somers
Paul Somers worked as a vice president for Digital Realty from 2010 until he was terminated in April 2014. While employed with Digital Realty, Somers claims to have reported possible securities law violations to senior management, and alleges he was fired shortly after making these internal reports. In November 2014, Somers filed suit against his Digital Realty, claiming that his former employer retaliated against him in violation of the Dodd-Frank Act by firing him for making an internal report protected by the Sarbanes-Oxley Act.

Digital Realty immediately asked the court to dismiss the case, arguing that Somers was not entitled to whistleblower protection because he did not meet the statutory definition under the Dodd-Frank Act. By his own account, Somers admitted that he did not make any reports to the SEC.

Lower Court Decisions

whistleblower protections

A California federal court and the 9th Circuit Court of Appeals both refused to dismiss the Somers’ case. The lower courts could not find a clear way to reconcile the Act’s narrow definition of whistleblower with the broad protections of its anti-retaliation provision. Therefore, the lower courts deferred to the SEC’s interpretation of the Act which extends protection to individuals who make internal reports. Recognizing that certain provisions of the Sarbanes-Oxley Act require internal reporting, the 9th Circuit reasoned that a strict application of the Dodd-Frank Act’s whistleblower definition would narrow the anti-retaliation provisions of the Act “to the point of absurdity,” leaving entire categories of employees, such as in-house counsel and auditors, with little protection under the Act.

In short, the 9th Circuit elevated Congressional intent and regulatory interpretation over the plain language of the Act. This created a split in the circuits, as the 5th Circuit Court of Appeals had strictly applied the Act’s definition of whistleblower in an earlier case. The Supreme Court accepted the case to resolve the dispute and determine who Congress intended to protect when it defined “whistleblower” in the Dodd-Frank Act.

SCOTUS
The Supreme Court ruled 9-0 in favor of Digital Realty. In the majority opinion authored by Justice Ginsburg, the Supreme Court held that an individual must report securities law violations to the SEC to be protected as a whistleblower under the Dodd-Frank Act. The Court found that the Dodd-Frank Act unambiguously defines a “whistleblower” as someone who provides information regarding securities law violations to the SEC. Because the statute’s definition limits those who are entitled to protection to those who report to the SEC, a person who reports only internally is not protected as a whistleblower regardless of the conduct they engage in, such as reporting misconduct.
The Court found that, by enacting the whistleblower provisions of Dodd-Frank, “Congress undertook to improve SEC enforcement and facilitate the Commission’s ‘recovery of money for victims of financial fraud.’” The Court held that by requiring the provision of information to the SEC, the narrower whistleblower definition serves the goal of assisting SEC enforcement.

Conclusion
The Supreme Court’s decision in Digital Realty Trust, Inc. v. Somers should remind all employers to evaluate anti-retaliation policies and to take all employee reports seriously. While a zero-tolerance policy is the most effective practice, employers should ensure all employees, supervisors and managers are aware of such policies. If you feel you have been a victim of retaliation, or have questions about any of California’s employment related laws, feel free to contact leading California employment lawyers at Kingsley & Kingsley. Call toll-free at (888) 500-8469 or contact us via email.

Kingsley & Kingsley

16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

fair employment posters

Updated Employment Posters from California Department of Fair Employment and Housing

fair employment postersThe California Department of Fair Employment and Housing (DFEH) has been busy in 2017, releasing updated posters covering Employment Discrimination, Family Care and Medical Leave (CFRA Leave), Pregnancy Disability Leave, Sexual Harassment, Pregnancy Discrimination, and Workplace Harassment. DFEH has organized the posters on their website, categorized by the poster/brochure audience or intent (i.e. those that are required versus those designed for employment, housing, business establishments, or hate/violence).

Required Posters  

DFEH has placed all required posters and brochures on a single webpage in multiple languages. Even with the numerous updates, DFEH points out the absence of changes in some posting obligations. Employers may post any version of the Workplace Discrimination poster (titled: California Law Prohibits Workplace Discrimination and Harassment / DFEH-E07P-ENG / formerly DFEH-162) from December 2014 to the present. Also, employers may post any version of the CFRA/Pregnancy Disability Leave notice (DFEH-100-21) from July 2015 to the present. Lastly, employers may post any version of the Rights and Obligations as a Pregnant Employee notice (DFEH-100-20) from April 2016 to the present.

All California employers are required to display the following poster:

Most California employers also must display two other posters:

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san francisco lactation ordinance

San Francisco Mayor Signs Workplace Lactation Ordinance

Nursing Mothers Get Increased Protections Starting January 1, 2018  workplace lactation

On June 30, 2017, San Francisco Mayor Ed Lee signed the “Lactation in the Workplace Ordinance”, increasing protections for nursing mothers working in San Francisco. Particulars of the ordinance follow:

When:  The ordinance will take effect on January 1, 2018.

Who:  The ordinance applies to anyone employed within the geographical boundaries of the City of San Francisco, and includes part-time employees. Conversely, the ordinance applies to employers with employees who are working in San Francisco.

What:  The ordinance requires businesses to provide employees with breaks and a designated location for lactation. Employers must also notify employees of their right to an accommodation for lactation. The ordinance also requires newly constructed or renovated buildings designated for certain uses to include lactation rooms, and amends the San Francisco building code to specify technical specifications of lactation rooms.

Lactation Breaks – The ordinance does not define a specific period of time for a “lactation break,” but expressly provides that the break should run concurrently with any break time that the employer already provides to the employee, if possible. Continue reading

employee notice domestic violence

California Employers Must Notify Employees of Rights Regarding Domestic Violence, Stalking and Sexual Assault

employee notice domestic violenceEmployee Rights to Deal With Domestic Violence, Sexual Assault and Stalking

Per the Labor Commissioner’s Office, California employers with 25 or more employees are required to provide to new employees upon hire, and to current employees upon request, notice regarding the rights of victims of domestic violence, sexual assault and stalking. The new law was effective July 1, 2017 and is intended to provide covered California employees with information about their rights to:

  • Take off time to procure medical attention or services from a domestic violence shelter, program or rape crisis center.
  • Take off time to obtain psychological counseling for issues related to domestic violence, sexual assault or stalking.
  • Use vacation or personal leave to receive safety planning assistance.
  • Take time off to secure a restraining order or other court order to protect the employee and the employee’s children from domestic violence, sexual assault and stalking.
  • Request and receive a reasonable accommodation to assist them in keeping safe from domestic violence, sexual assault and stalking at work (such as installing locks or changing a shift).
  • Take time off for the above reasons, even if you don’t have paid leave.
  • Be free from retaliation for being a victim of these issues or asserting the right to time off or reasonable accommodation for these reasons.

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employment law unpaid wages

Employment Laws Hidden in California’s Budget Bill

California’s latest budget bill (trailer bill SB 96) contains various changes to the state’s employment laws. employment law unpaid wages

Senate Bill 96 passed the Senate on June 15, 2017 and was officially enrolled on June 20, 2017. The bill is currently on Governor Brown’s desk with more than 30 tenets covering changes in the Departments of Veteran’s Affairs, Elections and Finance. It also contains numerous changes to Labor Standards Enforcement, Public Works Enforcement and OSHA Violations. Below we highlight changes to key employment laws contained in SB 96 as described in various legislative analyses.

Labor Standards Enforcement

Senate Bill 96 specifies that the statute of limitations on workers recovering unpaid wages and other penalties looks back from the date that an employer is notified of a Bureau of Field Enforcement investigation, to preserve the ability to recover unpaid wages and penalties that would have moved beyond the statute of limitations by the time a citation is issued. SB 96 also stipulates the following:

  • Allows certain workers in the car wash, farm labor, and garment manufacturing industries to recover unpaid wages and other damages from existing state special funds, and allow the Division of Labor Standards Enforcement (DLSE) to subsequently recover the unpaid wages and damages from employers to reimburse those special funds. 
  • Extends the time the Retaliation Complaints Investigation unit at the Department of Industrial Relations has to investigate a retaliation complaint from 60 days to one year.
  • Extends the time for employers to comply with DLSE’s determination on a retaliation complaint investigation from 10 days to 30 days.
  • Requires an employer to pay for DLSE’s legal costs when DLSE prevails in an action to enforce its determination on a retaliation complaint investigation.
  • Clarifies that workers may not be retaliated against for reporting a work-rated fatality, injury, or illness, or other activities protected by the federal Occupational Safety and Health Act.

Public Works EnforcementContinue reading

OSHA Delays July 1 Start to Electronic Workplace Injury Recordkeeping Rule

On May 17, the Labor Department announced that employers do not have to file workplace injury and illness information online with OSHA by the July 1 filing deadline.  

The U.S. Department of Labor Occupational Safety and Health Administration (OSHA) last week suspended a recent rule change requiring companies to electronically report their workplace injury and illness records. As we reported (here), on May 11, 2016, OSHA issued a final rule requiring certain employers to submit workplace injury and illness information electronically. The rule, which took effect at the beginning of 2017, had obligated covered employers to send in their summary data electronically no later than July 1. The information being collected was not due to change, just the method of reporting since employers already submit workplace safety information to OSHA. The new rule will make workplace safety data publicly available on OSHA’s website so that interested parties can search and download the data.

Proposed Reporting Requirements

Employers should be reminded that the electronic recordkeeping rule would not have created new obligations in terms of reporting. Those employers covered by the new rule would have been asked to simply use data from their OSHA Forms 300, 300A, and 301 when using the electronic reporting method. The biggest impact, however, would be OSHA having the ability to electronically post workplace injury and illness data on its website from all workplaces with 20 or more employees.  Submission was to be phased in based on employer establishment size and industry.

OSHA workplace injury reporting

Next Steps Uncertain

First, a new deadline has not been announced and OSHA has not offered a formal reason for the postponement. Second, although the filing deadline is just six weeks away, it is telling that the agency had not yet even provided the online portal for employers to begin collecting and submitting required information. Third, now that the new Labor Secretary Alexander Acosta is in position, he must designate a new OSHA Director. Further, the new rules do not come without controversy as employers in high-risk industries oppose making the information publicly available for consumption by unions, plaintiffs’ attorneys, and others. On the flip side, unions and other worker advocacy groups have threatened legal challenges to force OSHA to meet the July 2017 implementation date.

California Employment Law

Kingsley & Kingsley will continue to track OSHA’s Workplace Injury and Illness Reporting Rules as Labor Secretary Acosta implements changes. In the meantime, don’t hesitate to contact leading California employment lawyers at Kingsley & Kingsley with questions by calling the toll free number (888) 500-8469 or clicking here to contact us regarding your case.

Kingsley & Kingsley

16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)