Key takeaways

• The Ninth Circuit Court of Appeals ruled on March 8 that an employee’s internal reporting of alleged wrongdoing to his or her employer entitles the employee to protection under Dodd-Frank’s whistleblower anti-retaliation provisions.  In so holding, the Ninth Circuit sided with the Second Circuit and rejected the Fifth Circuit’s 2013 opinion that the anti-retaliation provisions only cover whistleblowers who provide information to the SEC.
• The Ninth Circuit’s decision deepens an already existing circuit split on the issue of whether internal whistleblowers can avail themselves of Dodd-Frank’s anti-retaliation provisions.  In December 2015 two federal district courts adopted the Fifth Circuit’s narrow view, but the majority of district courts that have considered the issue agree with the SEC’s broader reading of the statute, which has now been adopted by both the Second and Ninth Circuits.
• Although this issue will not likely be resolved unless and until the Supreme Court takes it up, the Ninth Circuit’s decision is a strong reminder to companies of the perils of retaliation against employees who report alleged wrongdoing, whether internally or externally.