by Stephen Kohn
PRACTICE TIP
Checklist 6 sets forth the common areas for which employees seek discovery in retaliation cases, along with supporting case authority.
RULE 24Get to the Jury
Every law sets forth a series of elements that must be met; otherwise a case is subject to summary dismissal. In other words, whenever a whistleblower case is filed, the very first thing an employer does is pull out a checklist. The checklist begins with a set of mandatory requirements under law for setting forth a valid case. One by one the skilled and highly paid company lawyer examines each element to find any technicality to have a court throw out the case. It will not matter if the whistleblower saved lives or saved money. To the company, winning is the single objective from the start. If you do not meet the criteria for each element in that checklist, the employer will file a motion to dismiss your case, and a court most likely will grant that motion. You will lose your case before it even starts.
Know the Checklist of Mandatory Requirements Under Law
Whistleblowers need to study the checklist first. They need to make sure they cover all their bases before filing a claim. The basic elements universally applicable to almost all whistleblower employment retaliation cases include the following:
1. The whistleblower must be an employee covered under the law.
2. The company must be an employer covered under the law.
3. The employee must have engaged in protected activity.
4. The management must have known of the protected disclosures.
5. The whistleblower must have suffered an adverse action.
6. There must be some proof of a connection between the adverse action and the protected conduct.
Although not a formal “element” of a claim, many whistleblower laws require employees to “exhaust” their administrative remedies before they can file cases in court.
THE EMPLOYEE AND EMPLOYER MUST BE SUBJECT TO THE LAW
This is usually not a major issue. However, some laws narrowly define whom they cover, and some employment situations are inherently problematic. For example, are employees who work in a foreign country for an American corporation protected? What happens if a person works for a subcontractor and the contractor retaliates? What liability does a parent corporation have for a subsidiary? These types of issues are complicated, and there are no simple answers. It is best for whistleblowers to find laws that explicitly cover their job and their employer.
There is a distinction between public and private employment in the majority of whistleblower laws. For employees who work in the private sector, certain laws, such as the Sarbanes-Oxley corporate whistleblower law, apply to them. Similarly, employees who work for the government are protected under specialized whistleblower protection laws. Protections under the First Amendment generally apply only to public-sector employees. Most federal statutes only apply to private-sector employees, although some apply exclusively to government workers, or both sectors of the economy.
Under federal law, employees can include former employees, job applicants, contractors, and agents. Employers can include companies that control access to job sites. Attorneys can also be protected employees. The SOX Act covers “agents” of employers and explicitly requires certain attorneys to blow the whistle if they witness securities fraud. Other whistleblower laws have also protected in-house counsel from retaliation, even when the information disclosed may be covered under the attorney-client privilege.
Most statutes explicitly define which employees are covered under which laws. Where there is a gray area, case law must be carefully reviewed.
ENSURE THAT YOUR DISCLOSURES ARE PROTECTED
Before blowing the whistle, an employee needs to decipher what type of “whistleblowing” is protected by law. He or she should ask questions: Does the law protect disclosures to supervisors? Does the law protect disclosures to hot-lines? Does the law protect disclosures to the news media? Are there specific government agencies identified in the law for which disclosures are encouraged or permitted?
Protected activity is defined within the text of the statute. But these definitions tend to be very general in nature. Thus it is important to review judicial interpretations of the law. The risks are immense for employees who blow the whistle before knowing what disclosures were protected under law.
Sometimes common sense does not apply and laws are interpreted in a highly technical manner that undermines the intent behind protecting whistleblowers. For example, if an employee works for the FBI and exposes illegal conduct to Congress, he or she is not protected under the Department of Justice FBI whistleblower law. However, if the employee exposes the exact same illegal conduct to the Department of Justice inspector general, he or she is fully protected. No law is perfect. It may appear logical that certain disclosures should be protected, but it is absolutely imperative to confirm that they are protected before stepping into the water with the sharks.
The safest course of action is to blow the whistle to an agency explicitly protected under the statute or under controlling judicial decisions. Conducting this research before a disclosure is made can significantly strengthen an employee’s case, by ensuring that the disclosure is protected under the most powerful law available to the employee.
IF FILING A RETALIATION CASE, MAKE SURE THE BOSS KNOWS WHO BLEW THE WHISTLE
A critical element in proving a whistleblower retaliation case is employer “knowledge” about who engaged in protected activity. The manager responsible for the adverse employment action must either know or suspect that the employee was a whistleblower. In other words, if an employee reports violations, but the boss never knew who blew the whistle, how can that employee be fired in retaliation for something the boss did not know he or she did? It is a perfect management defense. A boss cannot fire an employee in retaliation for conduct of which the boss was unaware.
An “innocent party” can actually be protected under whistleblower laws. This can happen when an employee never engaged in protected activity but was fired by “mistake” because that unlucky worker was a “suspected culprit” in the disclosures.
The “knowledge” element has caused significant problems. For instance, some employees want to blow the whistle anonymously because it makes sense to make a confidential disclosure for job protection. But what happens if the boss figures out who made the exposure? If an employee cannot prove that the boss knew who blew the whistle, he or she risks losing the case. Most courts permit employees to prove knowledge by direct or “circumstantial” evidence. In other words, if an employee was a confidential whistleblower, he or she can use circumstantial evidence, such as off-hand comments, or the nature of the allegations themselves (for example, he or she was one of the few persons who spoke out against the violation) to demonstrate that the employer thought that employee was the informer.
Employees who blow the whistle to their immediate supervisor usually can meet the knowledge requirement. A boss will have great difficulty denying knowing that an employee engaged in protected activity when the disclosure was made directly to him or her. Moreover, once an employee complains internally about a violation, that employee is always the number one suspect if a government regulatory agency becomes involved.
The major exception to this rule is the False Claims Act and other similar rewards-based whistleblower laws, including the Dodd-Frank Act and the IRS whistleblower rewards law. Under the FCA, whistleblowers must file confidential disclosures to the attorney general, and the initial lawsuit is filed under seal with the courts. In other words, the whistleblower is not permitted to tell the company that he or she has filed an FCA lawsuit. The case must remain confidential in order to give the Department of Justice time to investigate the merits of the claim. The confidential nature of the FCA disclosures can benefit employees. Filing a claim is statutorily protected. In other words, the law protects the filing of a confidential complaint and disclosure statement with the DOJ, even though the company cannot be served copies of these docume
nts. Under the Dodd-Frank Act, employees can obtain whistleblower rewards if they file their claims anonymously with the government.
PROTECTED ACTIVITY MUST BE CONDUCTED IN “GOOD FAITH”
This is a confusing element. The “good faith” standard does not mean that an employee who blows the whistle must be an angel, or must be strictly serving the public interest. Most laws, and nearly every court, understand that the subjective motive of an employee for blowing the whistle may be less then honorable (for example, an employee who is upset he or she did not get a promotion). The good faith element looks at whether an employee has a reasonable belief that what he or she is disclosing constitutes a violation of law/threat to public safety/fraud.
The good faith standard does not relate to an employee’s subjective motivation for becoming a whistleblower. Take a case in which an engineer blows the whistle on defective welds. The engineer believes that the defect in the welds could cause a bridge to collapse and files a complaint with the Department of Transportation. The government investigates the complaint, and the welds are found to be in fine shape. Should the employee be protected under a whistle-blower law?
Almost universally, courts addressing this issue have held that if an employee’s concerns over the safety of the welds had a reasonable basis in fact, the whistleblower must be protected. In other words, courts seek to determine whether a “reasonable” person could have a good faith belief that the welds could fail and cause harm. If the factual predicates for the claims are reasonable, courts will find that the whistleblowing was in good faith and those disclosures will normally be fully protected. But in cases in which no reasonable person could, in good faith, have suspected that the welds were faulty, the employee may lose protection. How much proof must an employee put forward to demonstrate to a court that his or her concerns were objectively reasonable? That is decided on a case-by-case basis, and different standards can be applied to different laws. Consequently, even though employees do not have to prove that their allegations were correct, it is important to ensure that they are based on objective facts.
No federal antiretaliation law requires that the employee’s allegations of misconduct be verified. For example, when Congress debated the Sarbanes-Oxley corporate whistleblower law, they cited with approval to an environmental whistleblower case decided by the U.S. Court of Appeals that clearly set forth this rule:
[A]n employee’s non-frivolous complaint should not have to be guaranteed to withstand the scrutiny of in-house or external review in order to merit protection . . . for the obvious reason that such a standard would chill employee initiatives for bringing to light perceived discrepancies in the workings of their agency.
The key feature of whistleblower laws is to encourage employees to report suspected wrongdoing.
All whistleblower laws are meant to encourage employees to step forward and provide information about wrongdoing to the proper authorities. These employees are often motivated by a desire to serve the public good; however, angelic motives are not required in whistleblower law.
AN EMPLOYEE MUST SUFFER ADVERSE ACTION
Merely calling oneself a “whistleblower” does not mean a person can file a suit. With the exception of the False Claims Act (and other rewards-based laws), all whistleblower protection laws require that the employee suffer some form of adverse action. A termination is universally accepted as an adverse employment action. Conduct short of a firing, such as a demotion, a suspension, or placing an employee on probation may also be considered adverse actions. There are numerous court decisions evaluating nearly every type of potential adverse action, ranging from “hostile work environment” to “constructive discharge” (i.e., when the working conditions become so intolerable that an employee is permitted to quit and then sue for being terminated).
What constitutes adverse action differs from state to state, law to law, and court to court. On one hand, some states require an actual discharge in order to file a public policy tort. On the other hand, under federal law, a “hostile work environment” can constitute adverse action, even if no direct negative action was ever taken against the whistleblower. Adverse action can include: transfer to a dead-end position, blacklisting, bad evaluations (that could impact pay or benefits) or bad references, denial of a promotion or benefits afforded other workers, retaliatory layoff, refusal to hire, a hostile work environment, reprimands or suspensions, and constructive discharge.
In Burlington Northern & Santa Fe Railway Co. v. White the Supreme Court wrestled with the issue of whether employer action that did not result in an employee losing money or benefits constituted adverse action. The Court held that it did if the harassment was “likely to deter” a reasonable employee from exercising protected whistleblower activities. This was a big win for whistle-blowers, as it recognized the “chilling effect” employer harassment has on the willingness of any employee to risk a job to report misconduct.
But it is equally well settled in law that “not everything that makes an employee unhappy is actionable adverse action.” Although it is very important to document changes in working conditions that followed the whistleblowing (as these changes may constitute evidence of retaliation), an employee should not necessarily file a lawsuit over every minor action taken by an employer. If the judge or jury does not think that the mentioned conduct rose to the level of a true adverse action, the case will be thrown out. But sometimes it is important to send a message that any act of retaliation will be strongly challenged. You should not wait until you are fired, or until the boss builds a strong case against you, to file a lawsuit.
Take-home message: Don’t pick a fight over any minor slight. Wait until the fight is both winnable and worth the effort.
Exhaust Administrative Procedures
The final technicality companies often use to have cases thrown out of court is referred to as the “exhaustion” doctrine. This rule applies to the numerous statutes that require employees to file a claim with a designated administrative agency before a case can be filed in court. For example, under the Sarbanes-Oxley Act, a complaint must be filed with the Department of Labor (DOL). Only after the case has been before the DOL for 180 days can the case be removed to federal court. Even if the DOL has taken no action, the employee must still wait until he or she has “exhausted” administrative remedies. If the claim was filed directly in federal court, the case would be dismissed due to the failure to “exhaust.”
Numerous employment laws require exhaustion of administrative remedies, including Title VII of the Civil Rights Act (sex- and race-based discrimination). Others, like the Clean Air Act or the Mine Health and Safety Act, only allow for administrative proceedings.
Because so many whistleblower laws require complainants to be initially filed with the U.S. Department of Labor (DOL), that agency has developed an expertise in whistleblower law. Consequently, even when employees are permitted to remove their cases to federal court, many employees choose not to, and have their cases heard by DOL judges. Among the whistleblower laws that require initial filings within the DOL are: the Sarbanes-Oxley Act; the Consumer Products Safety Act; the Railroad, Airline, Trucking, and Public Transportation laws; and the Atomic Energy Act.
Regardless of whether you want to pursue your case in court or in an agency, it is absolutely imperative to carefully review the filing and appeal procedures to ensure that you fully “exhaust” all administrative requirements at each step of the game.
PRACTICE TIPS
Federal Rules of Civil Procedure 12 and 56 set forth the standards for having a case dismissed (and conversely, what is needed to avoid dismissal).
• NLRB v. Scrivener, 405 U.S. 117 (1972) (premier case on broad scope of protected activity)
• Passaic Valley Sewerage Commissioners v. U.S. Dept. of Labor, 992 F.2d 474 (3rd. Cir. 1993) (premier case on “good faith”)
• Fraizer v. MSPB, 672 F.2d 150 (D.C. Cir. 1982) (premier case on employer “knowledge”)
• Burlington Northern
& Santa Fe Railway Co. v. White, 548 U.S. 53 (2006) (premier case defining adverse action)
• Halliburton v. ARB, 771 F.3d 254 (5th Cir. 2014) (applying Burlington to corporate whistleblower cases)
RULE 25Win the Case: Prove Motive and Pretext
The penultimate question in every whistleblower retaliation case revolves around proving “causation.” The employee must prove that he or she was fired or retaliated against because of a protected disclosure. In other words, employees must prove that protected activity was a “contributing” or “motivating” cause for the adverse employment action. Employees must show that the act of blowing the whistle played a part in the decision-making process. There must be some form of causal relationship between the whistleblowing and the adverse action.
The reason for this requirement is simple: Whistleblowing does not grant employees immunity to engage in misconduct or fail to perform their job. Companies can always discipline an employee for a legitimate business reason. However, a company cannot treat a whistleblower more harshly than they treat other employees (this is known as “disparate treatment”).
Typical Arguments the Company Will Use to Defend Actions
The main difficulty in proving causation is simple. Employers do not admit that they fired an employee because he or she blew the whistle. In almost every case, regardless of how outrageously an employee was treated, a company will formulate a “pretext” or a so-called “legitimate” justification for terminating an employee. And sometimes this pretext is benign.