Employees of American companies working outside the US can rely on domestic whistle-blowing protection laws after a landmark court ruling this week.

The case concerned Rosemary O’Mahony, a British citizen who worked in the Paris office of consultants Accenture for 14 years. Ms O'Mahony claims she was demoted after she told French authorities about tax irregularities and that senior Accenture bosses in the US were involved in the decision to retaliate against her.

Accenture, which is based in Bermuda but is listed on the New York Stock Exchange, argued that Ms O’Mahony could not rely on whistle-blowing protection laws because she was based outside the US.

Introduced as part of the Sarbanes-Oxley Act in 2002, the laws prevent employers from retaliating against staff members who reveal misconduct. The law, which is to similar to one in the UK, allows the employee to claim compensation if they can prove they were unfairly treated following a disclosure.

The case focused on whether Ms O’Mahony was allowed to rely on the whistle-blowing laws, which, Accenture argued, US judges have traditionally only extended to cover employees located in the US.

However, Judge Victor Marrero, in the Southern District of New York, ruled that since the alleged “wrongful conduct and other material acts occurred in the US”, whistle-blowing protection could be extended to Ms O’Mahony without crossing the line on “extraterritorial application of US law”.

O’Mahony was employed and compensated by a US subsidiary of a foreign corporation, the judge said, concluding that the relationship between Accenture and Ms O’Mahony should be considered that of a US employer and one of its employees.

Lawyers believe this is the first time a US judge has made such a ruling and that it could pave the way for millions of foreign employees of US-headquartered companies to be able to rely on similar laws.

In a note to clients, Philip Berkowitz, head of the international employment practise at lawyers Nixon & Peabody, said the decision “seems to be an unprecedented overseas application of the law”, which was a “troubling development for employers”.

Accenture said it considered Ms O’Mahony’s allegations “baseless and without merit”.

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