By: Madison E. Steinmann*
Abstract
Congress added the whistleblower provision of the Sarbanes-Oxley (“SOX”) Act in the wake of the Enron scandal to promote employee reporting of employers’ potentially fraudulent conduct. Five circuit courts disagree on how to interpret this provision. The provision employs a reasonable person standard, focusing on the objective and subjective elements of the standard. While the five courts agree on how the subjective element should be applied, they disagree on how to apply the objective element.
Until the Eleventh Circuit Court addressed Ronnie v. Office Dept., LLC in 2023, the circuit split was an even 2–2. In Ronnie, the Eleventh Circuit joined the Second and Fourth Circuits. Together, these three circuit courts agree that the objective element of the reasonable person standard should be evaluated using the “totality of the circumstances” test. This test requires employees to make a minimum showing of evidence that supports their report.
In contrast, the Third and Sixth Circuits do not think applying the totality of the circumstances test is necessary. These circuits hold that placing a higher burden on reporting employees will reduce reports and attempt to protect employee reports that are reasonable but mistaken. Employees need to have a clear understanding of what is required of them before they report potentially fraudulent activity. Without this understanding, the SOX Act may not protect employees as whistleblowers after reporting.
This Comment argues that the Third and Sixth Circuits are correct and that the legislative history of the SOX Act supports their reasoning.
This Comment also highlights issues with the totality of the circumstances test and why it should not be used in these cases. Finally, this Comment offers two proposals to amend the whistleblower provision of the SOX Act that will allow Congress to strike a balance between the two sides.
* J.D. Candidate, The Pennsylvania State University Dickinson School of Law, 2026. I would like to thank my parents, sister, and partner for their continued support throughout the writing, research, and editing of this Comment.