by Stephen Kohn
Other state courts that have considered the adequacy of the federal Occupational Safety and Health Act have agreed with the holding of the Kansas Supreme Court and have permitted workers to rely on the state common law public policy exception to obtain relief. These states include Alaska, California, Illinois, Iowa, Minnesota, New Mexico, New Jersey, Nevada, Ohio, and Oklahoma. Employees who allege that companies violate worker safety laws may also be protected under state whistleblower protection statutes. For example, the Maine Whistleblower Protection Act explicitly protects employees who raise concerns regarding “unsafe condition(s)” or practices that “put at risk the health or safety of that employee or any other individual.”
Pipeline Safety Act
Congress enacted a special DOL-administered whistleblower law that covers environmental and safety violations at oil and gas pipelines. The pipeline law was modeled on the Energy Reorganization Act, and it follows similar procedures and legal standards as set forth in the nuclear safety law.
Ripping Off the Taxpayer/False Claims Act
President Lincoln signed the first whistleblower protection statute into law on March 2, 1863. This law, today know as the False Claims Act, was conceived at the height of the Civil War, when government contractors were pilfering the U.S. Treasury by selling defective goods to the Union armies (i.e., selling sawdust as gunpowder). The law has been amended five times.
The False Claims Act is the most successful whistleblower law, and its history, procedures, and requirements are spelled out in Rules 2 and 6 and Checklists 1 and 4. Its international application is discussed in the International Toolkit.
Under the modern False Claims Act, whistleblowers file claims with the attorney general and in federal court. If there is a finding that fraud was committed against the government, the whistleblower shares in the proceeds recovered by the United States. In other words, whistleblowers who prove their cases under the FCA are entitled to substantial monetary rewards, often in the millions of dollars. The requirements governing these provisions are detailed in Rule 6.
In addition to the recovery provisions, known as qui tam, the 1986 amendments also incorporated a traditional antiretaliation law into the FCA. This provision prohibits termination or on-the-job discrimination against any employee who files a FCA case or assists in an investigation of a false claim against the government.
Whistleblowers who suffer retaliation must file their claims in federal court. They are entitled to reinstatement, double back pay, special damages, and all attorney fees and costs reasonably incurred. The law prevents any employer or other “associated others” from retaliating against employees who undertake any “efforts to stop violations” of the FCA. In 2010 the antiretaliation provision was amended to include a three-year statute of limitations.
Although the FCA is clearly the mother of all antifraud whistleblower laws, there are other federal statutes in which employees can blow the whistle on taxpayer/contract rip-offs. These include the Major Frauds Act (discretionary payments to whistleblowers and an antiretaliation provision similar to the FCA), Public Contractor Employee Protection (inspector general review of retaliation claims), and special antiretaliation protections for defense contractor employees who expose violations of laws related to defense contractors. The Defense Department law permits employees who exhaust their administrative remedies to file claims in federal court and obtain compensatory damages.
Seaman Whistleblower Protection
The Protection of Seaman Against Discrimination law is designed to “encourage employees to aid in the enforcement of maritime laws” by providing information about possible violations of law to the Coast Guard. Court decisions have broadly interpreted the scope of protected activity and permitted employees to obtain back pay, compensatory and punitive damages, along with attorney fees. This law was amended in 2010 and now requires claims to be filed with the Department of Labor according to the procedures utilized under the Surface Transportation Act.
Seamen who provide the government with information on ocean pollution or violations of the MARPOL treaty are eligible for financial rewards. Upon request (usually made by the Department of Justice, which prosecutes ocean pollution cases), courts regularly grant seamen 50 percent of the fines collected under the Act to Prevent Pollution from Ships. This rewards law is explained in Rule 11.
Trade Secrets
On May 11, 2016, President Obama signed the Defend Trade Secrets Act, 18 U.S.C. 1833(b). This law established specific procedures by which employees can disclose information their employers classify as “trade secrets” to government officials, closing a major loophole in protection for whistleblowers.
Before this law was passed, corporations tried, often successfully, to silence whistleblowers by alleging that the concerns they raised included “trade secrets” and that their disclosure outside the company was prohibited by law. To close this loophole Congress included a whistleblower “immunity” provision when it passed the Defend Trade Secrets Act in 2016. Employees who provide trade secret information to federal or state officials, pursuant to the procedures established in the law, are immunized from either civil or criminal liability. The law also preempts state laws that restrict whistleblowers from reporting alleged trade secret information to government authorities.
As explained in Senate Committee on the Judiciary Report 114-220, employees can disclose trade secret information to “a Federal, State, or local government official or to an attorney,” if they do so “in confidence” and if the disclosure is “for the purpose of reporting or investigating a suspected violation of law.”
Employees can also use trade secret information in a court proceeding, provided the lawsuit is filed “against an employer for retaliation for reporting a suspected violation of law.” The litigation-disclosure rule permits trade secret information to be used in court, “provided the individual files any document containing the trade secret under seal and does not disclose the trade secret other than pursuant to a court order.” Whistleblowers can confidentially show their attorneys trade secret information.
All employers are required to give their employees notice of this immunity provision. Failure to do so will prevent employers from obtaining exemplary damages or attorney fees from employees who disclose trade secrets in violation of law. Under the law employees are still prohibited from releasing trade secret information to the public.
Transportation (Trucking, Railroads, and Public Transportation)
This is another area in which Congress has made progress. The first transportation safety whistleblower law, incorporated into the Surface Transportation Act, covered employees engaged in commercial motor vehicle safety including truck drivers, freight handlers, and mechanics. The original law was modeled on the environmental protection statutes. Cases are filed within the Department of Labor and subject to full evidentiary hearings similar to those conducted in environmental cases. There are also two levels of appeal: the first within the DOL to the secretary-appointed board and the second to the U.S. Court of Appeals. The statute of limitations is 180 days and the law includes an immediate reinstatement provision. This provision permits employees to be temporarily placed back on the job, with full pay and benefits, while their case is pending in court. Temporary or preliminary reinstatement can be ordered if, on the basis of an investigation by the Occupational Safety and Health Administration, the DOL determines that the employee was fired illegally.
Preliminary reinstatement is an invaluable procedure for employees fired from their jobs. Instead of being out of a job for the years it can take a legal case to move through the courts, the employee is reinstated in the job and stays employed while the case is pending. If the employee loses the case, the company can again remove the employee, but the employee does not have to pay back any of the wages or benefits earned while he or she worked for the company during the “preliminary reinstatement” period.
Preliminary reinstatement provisions are also included in other federal whistl
eblower laws, including mine safety, airline safety, nuclear safety, consumer product safety, food safety, and corporate shareholder fraud cases. Industry challenged the U.S. Supreme Court regarding the procedures. The U.S. Supreme Court upheld Congress’s power to authorize preliminary reinstatement provided that certain basic due process requirements were met. Laws that provide for preliminary reinstatement are very attractive, as the long delay in obtaining a final enforceable ruling in any legal case, including whistleblower cases, can have a disastrous impact on an unemployed worker.
In 2007, based on recommendations issued by the National Commission on Terrorist Attacks Upon the United States (the “9/11 Commission”), Congress further strengthened the transportation whistleblower laws. The Surface Transportation Act was significantly improved, and similar protections were added for railroad workers and employees working for any public transportation agency or contractor. The airline safety law was not covered under these amendments.
The 2007 amendments established uniform protections under three ground-transportation whistleblower laws (i.e., the Surface Transportation Act, the National Transit Systems Security Act, and the Railroad Safety Labor Act). Under the railroad and public transportation laws, the definition of protected activity was not limited to safety violations, but also covered violations of any federal law, any law related to security, and the misuse of any public funds intended to be used for safety or security measures. The definition of “protected activity” under the Surface Transportation Act was expanded to include security matters.
The statute of limitations for all three laws is 180 days, and they all follow the same DOL filing, appeal, and preliminary reinstatement rules. Furthermore, under all three laws punitive damages, capped at $250,000, are permitted. Like the SOX, transportation-safety whistleblowers are granted the right to file de novo claims in federal court. Court filings are permitted only if the employee files his or her initial case within the Department of Labor and utilizes the DOL process for a minimum of 210 days. If the DOL issues a final order within 210 days of a complaint being filed, the employee’s right to file a new case in federal court is extinguished.
Witnesses in Federal Court Proceedings
As part of the Civil Rights Act of 1871, Congress also prohibited all conspiracies to deter or harass witnesses who testified in U.S. court proceedings. The procedures and remedies under the witness protection law are identical to those afforded employees under the other portions of the CRA of 1871, and include the right to a trial by jury in federal court and the full array of damages. In 1998 the Supreme Court unanimously permitted an at-will employee to file a CRA claim after he was fired for obeying a federal grand jury subpoena for testimony.
PRACTICE TIP
Checklist 2 offers a comprehensive list of federal whistleblower protection laws, along with citations to major cases.
RULE 5Don’t Forget State Laws
The roots of modern whistleblower protection can also be traced back to a local state court ruling that overturned the one-hundred-year-old “at will” doctrine. That doctrine previously gave employers a near absolute right to fire workers for “any reason or no reason.” It was a whistle-blower who first put a fatal crack into this old laissez-faire doctrine and ruled that employees could not be fired for reasons that undermined a clear mandate of “public policy.”
In October 1955, Peter Petermann was employed as a business agent for the Teamsters Union. He was called to testify before a California State Assembly committee that was looking into corruption. His supervisor demanded that Petermann falsely testify. Petermann refused and was consequently accused of disloyalty for embarrassing his union bosses when he “gave correct and truthful answers to all questions.” In consequence, he was summarily fired the very next day.
Petermann challenged his termination in state court. The lawyers representing his bosses argued that under the “at-will” doctrine companies could fire employees for “any reason or no reason” unless they had an employment contract. That was the standard rule governing employment in all fifty states. Breaking with over one hundred years of legal tradition, the California court rejected this argument. It held that the “right to discharge an employee” could be “limited” by “public policy,” even when there was no statute protecting the employee.
The court did not use the word whistleblower in describing its actions, as that term had not yet entered the vocabulary of employment law. But the Court held that employees could not be fired for testifying about their company’s wrongdoing: “It would be obnoxious to the interests of the state and contrary to public policy and sound morality to allow an employer to discharge any employee . . . who declined to commit perjury.”
The court recognized Petermann’s right to sue the Teamsters Union for damages, and eventually awarded him $50,000.
In the landmark 1959 decision, the court upheld a cause of action by the employee for wrongful discharge based on a violation of “public policy.” In other words, a company could not use its economic might to punish an employee who simply wanted to follow the law and tell the truth in court. The whistleblower revolution had started. Within twenty-five years the majority of states agreed with California, and today whistleblowers are protected under the common law in all but a few holdout states.
Under common law, forty-five states and the District of Columbia now protect whistleblowers under a “public policy” exception to the “at will” doctrine. Under this “exception,” employers can still fire employees for “any reason or no reason”; they just cannot fire workers for the wrong reason—for a reason that violates public policy. Most states consider this claim a “tort,” which means employees file their cases in court, have a right to a jury trial, and the juries can award economic damages (for example, lost wages and benefits), compensatory damages (loss of reputation and emotional distress), and in egregious cases punitive or exemplary damages.
Each state has its own definition of what type of conduct is protected under the “public policy exception,” but almost every state protects the following types of disclosures or conduct:
• Refusal to violate a law;
• Performance of job duties required under law;
• The exercising of a legally protected right (such as testifying in court or filing a workers’ compensation claim);
• Reporting violations of law for the “public benefit.”
If applicable, the “public policy” tort is a great fit for whistleblowers, as it permits an employee to obtain punitive damages and have his or her case heard before a jury. But that is not the only common law remedy employees can use to protect their careers. Whistleblowers have also obtained coverage under more traditional causes of action, such as intentional infliction of emotional distress, defamation, breach of contract, and other similar remedies.
In addition to common law, over twenty-five states and municipalities have enacted their own versions of the False Claims Act, providing for qui tam related to fraud in spending state and local tax revenue. In addition to rewards provisions that mirror the federal law, state FCAs almost universally also have antiretaliation provisions that permit employees to file retaliation claims for wrongful discharge. What’s more, a growing number of states have also enacted Whistleblower Protection Acts that cover all employees.
Specific State Laws
Listed here is a summary of where the states fall.
COMMON LAW PROTECTION
Many states offer common law protection under this “public policy exception” to the “at-will” doctrine. Under this protection, tort damages are permitted, unless otherwise specified. These states are Alaska (limited to contract damages); Arizona (modified by statute); Arkansas (limited to contract damages); California; Colorado; Connecticut; Delaware; the District of Columbia; Florida (modified by statute); Hawaii; Idaho; Illinois; Indiana; Iowa; Kansas; Kentucky; Maryland; Massachusetts; Michigan (except if covered under a statutory remedy); Minnesota (except where displaced by statutory
remedy); Mississippi; Missouri; Nebraska; Nevada; New Hampshire; New Mexico; North Carolina; North Dakota; Ohio (the legislature passed a weak whistleblower law, but the courts still permit common law public policy claims); Oregon; Pennsylvania; South Carolina; South Dakota (contract damages only); Tennessee; Texas; Utah; Vermont; Virginia; Washington; West Virginia; Wisconsin; and Wyoming (except if the employee is covered under another statute or a collective bargaining agreement).
STATES THAT HAVE REJECTED A COMMON LAW PUBLIC POLICY REMEDY FOR WHISTLEBLOWERS
Alabama; Georgia; Montana (the Montana courts affirmed whistleblower rights under the public policy rule, but the state legislature enacted a law overturning that decision and implementing a very weak state law that provides no real protections for whistleblowers); and New York.
STATES WITH A COMPREHENSIVE WHISTLEBLOWER PROTECTION ACT
Arizona; Connecticut; Florida; Hawaii; Maine; Michigan; Minnesota; New Hampshire; New Jersey; and Rhode Island.
OTHER STATE WHISTLEBLOWER PROTECTION STATUTES
In addition to state Whistleblower Protection Acts, almost every state has narrower whistleblower protection statutes that cover specific claims, such as occupational safety, protection for nurses, and protection for state-employee whistleblowers. Also, many states have recognized whistleblowers’ abilities to use other laws to protect themselves, such as libel or intentional interference torts.
STATES AND MAJOR CITIES WITH FALSE CLAIMS ACTS