The Supreme Court ruled Tuesday that whistle-blower protections in a federal law passed in response to the Enron financial scandal apply broadly to employees of publicly traded companies and contractors hired by the companies.
The justices voted 6-3 in favor of two former employees of companies that administer the Fidelity family of mutual funds. The workers claimed they faced retaliation after they reported allegations of fraud affecting Fidelity funds.
The case involved the reach of a provision of the Sarbanes-Oxley Act, passed in 2002 in response to the Enron scandal, which protects whistle-blower activity. The measure was intended to protect people who expose the kind of corporate misdeeds that arose at Enron.
Justice Ruth Bader Ginsburg said in her opinion that the law "shelters employees of private contractors that serve public companies, just as it shelters the public companies' own employees." Justices Sonia Sotomayor, Samuel Alito and Anthony Kennedy dissented.
Sotomayor said the court's decision gives the law a "stunning reach" and could potentially allow a baby sitter to bring a federal case against the family that employed him.
Business groups also criticized the decision as likely to lead to a raft of frivolous lawsuits.
But the head of the National Whistleblower Center said the decision will make it harder for companies to silence whistle-blowers.
Jackie Hosang Lawson and Jonathan M. Zang complained of retaliation for whistle-blower activities from the privately held parent company and subsidiary companies that run the Fidelity family of mutual funds.
Lawson resigned after complaining of harassment, and Zang was dismissed, and they both sued.
A Fidelity representative said the company will continue to fight Lawson and Zang's claims, and added, "It is important to note that there has been no determination of the merits of either former employee's claims by any of the courts."