A recent decision of the US District Court in Manhattan has ruled that an employee of a French company, who was based in France, was entitled to claim whistleblowing protection under the US Sarbanes-Oxley Act of 2002 ("SOX"). This was because the subject of the whistleblowing was alleged fraud committed in the US by a US sister company during a period when it employed the individual in France and, although the retaliation took place at a time after the employee's employment had been transferred to the French company, the alleged decisions to retaliate were taken by the US company in the US.

O'Mahony, an Irish national, was a partner and employee of Accenture LLP, the US subsidiary of Accenture Ltd, a Bermuda company listed on the NYSE. From 1984 to 1992 she worked in the US, transferring to France in 1992, remaining an employee of the US company until August 2004, when she became a partner and employee of Accenture SAS, Accenture Ltd's French subsidiary, until October 2006.

O'Mahony alleged that she informed various executives of an obligation to pay French social security contributions on her behalf for the period during which she was employed by the US company in France. She alleged that after her employment transferred to the French company she was informed that the US company's interests would be better served by not paying the French social security contributions and concealing the length of her residency in France. O'Mahony further alleged that she objected to this approach and that shortly thereafter a decision to reduce her level of responsibility was taken by the US Global Business Operations Director in New York, leading to a reduction in compensation.

The decision is important in that the US Courts have previously refused to extend such protection to employees outside of the US, on the basis that SOX does not have extraterritorial application. However, the Court maintained that its decision here was not giving SOX extraterritorial affect. This was because the alleged wrongful conduct and decision to retaliate occurred in the US by persons located in the US. It appears to be the first time the courts have focused on the location of the decision to retaliate rather than the location of the retaliation. The Court also took into account the fact that O'Mahoney had worked for the US company in the US for several years prior to the events in question.

US employers should take care to ensure that any decisions concerning employees of foreign subsidiaries are taken by the employing entity overseas, to limit the risk of the employee seeking to obtain protection for whistleblowing under SOX. (O'Mahony v Accenture Ltd)