On February 21, 2018, the United States Supreme Court resolved a circuit split and held that the whistleblower protections under the Dodd-Frank Act (“Dodd-Frank”) applied only to employees who complained to the Securities and Exchange Commission (“SEC”) about their employers’ alleged violations of federal securities laws. As a result, employees whose complaints about alleged employer misconduct are only made to their company’s management will not be covered by Dodd-Frank’s anti-retaliation provisions.

Dodd-Frank amended the Securities Exchange Act in 2010 to provide that employers must not “discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against” a “whistleblower” for: (1) providing information related to a violation of the securities laws to the SEC; (2) “initiating, testifying in, or assisting in any investigation or judicial or administrative action” of the SEC based upon or related to such alleged violations; or (3) making disclosures required by SOX.

In Digital Realty Trust Inc. v. Paul Somers, the Supreme Court overturned a Ninth Circuit Court of Appeals decision expanding the definition of “whistleblower” to provide Dodd-Frank protection to employees who seek redress of alleged securities laws violations by complaining to others within the company. This decision was at odds with the Fifth Circuit’s ruling in 2013 that Dodd-Frank’s whistleblower provisions only applied when an employee brought allegations of such violations to the SEC.

This decision could have an immediate impact on numerous pending Dodd-Frank whistleblower lawsuits and employers should aggressively seek dismissal of whistleblower claims filed by employees who did not first approach the SEC with their concerns. However, this decision should not be seen as giving an employer a license to retaliate against employees who complain internally about alleged violations of securities laws. While such employees might not be protected by Dodd-Frank, they may still be able to assert claims under other federal and state laws that protect whistleblowers (such as the Florida Private Whistleblower Act and New Jersey’s Conscientious Employees Protection Act).