Whistleblower Laws: What Businesses Need to Know

Transcription

1 Whistleblower Laws: What Businesses Need to Know Presented By: Steven H. Trent ( )

2 Employees May Initiate Agency Investigation Complainant (EEOC, OSHA, MSHA, NLRB) Whistleblower (False Claims Act) As complainant, Call OSHA or other government agencies Or talk with company OSHA Involved Phone & fax Inspection Disagreement with policies, i.e. False Claims Act, employment policies, safety policies 106

3 Laws with Retaliation Provisions Title VII of the Civil Rights Act of 1964 The Age Discrimination in Employment Act (ADEA) The Americans with Disabilities Act (ADA) The Family Medical Leave Act (FMLA) The Fair Labor Standards Act (FLSA) The National Labor Relations Act (NLRA) The Occupational Safety and Health Act (OSHA) Civil Rights Laws 42 U.S.C U.S.C U.S.C. 1985(3) 107

4 More Laws with Retaliation Provisions The False Claims Act The First Amendment to the U.S. Constitution The Employee Retirement Income Security Act (ERISA) The Immigration Reform and Control Act (IRCA) The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) Executive Order (OFFCP) Title VI (prohibition in government funding based upon race) The Job Training Partnership Act The Employee Polygraph Protection Act 108

5 OSHA Jurisdiction for Whistleblower Complaints 15 U.S.C Asbestos Hazard Emergency Response Act (AHERA) 42 U.S.C Clean Air Act (CAA) 42 U.S.C Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) 12 U.S.C.A Consumer Financial Protection Act of 2010 (CFPA), Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of U.S.C Consumer Product Safety Improvement Act (CPSIA) 42 U.S.C Energy Reorganization Act (ERA) 49 U.S.C Federal Railroad Safety Act (FRSA) 33 U.S.C Federal Water Pollution Control Act (FWPCA) 46 U.S.C International Safe Container Act (ISCA) 49 U.S.C Moving Ahead for Progress in the 21st Century Act (MAP-21) 109

6 OSHA Jurisdiction for Whistleblower Complaints 6 U.S.C National Transit Systems Security Act (NTSSA) 29 U.S.C. 660, Section 11(c) Occupational Safety and Health Act 49 U.S.C Pipeline Safety Improvement Act (PSIA) 42 U.S.C. 300j-9(i) Safe Drinking Water Act (SDWA) 18 U.S.C.A. 1514A Sarbanes-Oxley Act (SOX) 46 U.S.C Seaman's Protection Act, 46 U.S.C (SPA), as amended by Section 611 of the Coast Guard Authorization Act of 2010, P.L U.S.C. 399d Section 402 of the FDA Food Safety Modernization Act (FSMA) 29 U.S.C. 218C Section 1558 of the Affordable Care Act (ACA) 42 U.S.C Solid Waste Disposal Act (SWDA) 49 U.S.C Surface Transportation Assistance Act (STAA) 15 U.S.C Toxic Substances Control Act (TSCA) 49 U.S.C Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21) 110

7 Virginia Whistleblower Laws Virginia Fraud Against Taxpayers Act: allows for a suit by an individual taxpayer or the attorney general if a false report or claim is submitted for government payment Fraud and Abuse Whistle Blower Protection Act: protects individuals who report wrongdoing at a government agency OR independent contractor working for a government agency 111

8 Virginia Whistleblower Laws (cont.) Virginia, like many states, has a false claims act (Virginia Fraud Against Taxpayers Act) that provides protection for disclosure of a false report submitted for state payment; the purpose of the law is to protect taxpayers from fraudulent payouts Virginia previously only provided state law whistleblower protection to executive branch employees, but the governor signed the Fraud and Abuse Whistle Blower Protection Act into law on March 31, 2014, and the law became effective July 1, 2014 the Act expands whistleblower protection to ALL Virginia residents if the report is based on fraud by a state agency or independent contractor of a state agency 112

9 Fraud and Abuse Whistleblower Protection Act Fraud Against Taxpayers Act Virginia Whistleblower Laws Compared Private right of action? Type of damages available Yes, citizens and state employees alike may bring suit. Citizen or employee may recover 10% of damages; state may recover actual damages. Yes, private citizen or attorney general may initiate. Treble damages plus $5-10k fine; citizen may recover percentage of total recovery as reward for prosecution. Attorney fees available? Yes. Yes. Limited to public/private sector? No. Any individual may disclose fraud/abuse within the government or committed by private contractors. No. Any entity that submits false report for payment to Virginia. What forum has authority? Circuit court in jurisdiction where whistleblower is employed. Circuit court in jurisdiction where whistleblower is employed. 113

10 What does the VA Fraud and Abuse Whistle Blower Protection Act Mean for Businesses? Disclosure outside the business about fraud is protected if the business is an independent contractor that performs work for the State Monetary reward available for whistleblowers where at least $5k in fraud is recovered Discrimination and retaliation against the whistleblower are prohibited, and would subject a business to liability 114

11 Elements of a Whistleblower/Retaliation Claim The employee must show: 1. Protected activity: the condition complained of was a protected condition such as fraud under Sarbanes-Oxley 2. Adverse employment action: the employee complainant was either fired, received less hours etc. 3. Causal connection: the reason for the adverse employment action was the protected activity (the whistleblowing) 115

12 Forms of Protected Activity Two forms: Opposition: refusing to cooperate with the employer or complaining internally (filing a complaint with the HR department rather than leaking the problem outside the company) Participation: actually filing a charge with OSHA or another agency 116

13 What Kind of Activity is Protected Through OSHA? Protected Activity Good faith by employee to refuse to work in unsafe condition Legitimate concerns about another employee s safety Not Protected Activity Employee refuses to perform work, but no good faith safety concern Employee can be disciplined 117

14 Protected Activity (cont.) 1. Opposition: Filing or threatening to file a charge of discrimination Making an internal complaint alleging discrimination Opposing a discriminatory practice or policy 2. Participation: Complaints to the FCA, EEOC, OSHA, or MSHA OSHA investigates 22 different statutes for whistleblower activity More whistleblower activity than any other agency OSHA s biggest initiative Filing of online complaints 118

15 2. Adverse Employment Action Termination, demotion, failure to promote and the like are clearly considered adverse employment actions Reducing hours may constitute an adverse employment action Other actions are not so clear 119

16 Burlington Provides Some Guidance Regarding Adverse Employment Action Burlington Northern and Santa Fe Rwy Co. v. White The United States Supreme Court held that retaliatory conduct need not be employment related Plaintiff must show that a reasonable employee would have found the challenged action materially adverse 120

17 Adverse Employment Action: Reasonable Person Test The action would have dissuaded a reasonable worker from making or supporting a charge of discrimination Although Burlington involved a Title VII claim, the principle has been applied under other federal laws and also under state laws 121

18 Adverse Employment Action Examples Is this adverse action? Supervisor s refusal to invite an employee to lunch Petty slights, minor annoyances, and simply lack of good manners A written reprimand that was later rescinded 122

19 Adverse Employment Action Examples Is this adverse action? Exclusion of an employee from a weekly training lunch Yelling at the employee Heightened scrutiny A lower performance evaluation 123

20 Causation: Linking Whistleblowing to the Adverse Action Direct Evidence Notes showing that the reason for the employment action was the whistleblowing Circumstantial Evidence: Decision maker knew of the protected activity Close proximity between the report and the adverse action suggests a causal link Inconsistencies between explanations given for the adverse action Sharp contrast in treatment of employee before and after notice of protected conduct 124

21 Non-Retaliatory Reasons for Employment Actions Poor job performance Insubordination Violation of work rules Excessive absenteeism Lack of qualifications 125

22 Common Whistleblower Grounds Safety complainant Traditionally thought of as what OSHA investigates Employee concerned about safety of job Various statutes investigated by OSHA (a few examples) Sarbanes-Oxley, Affordable Care Act, Food Safety Act Employee concerned about practice of employer, concerned about retaliation for complaint False Claims Act and Dodd Frank Ranges from financial industry to Medicare/Medicaid fraud Monetary incentive to employees 126

23 What Happens if an Employee Complains to OSHA? OSHA conducts on site inspection Private interviews with non-management Safety perception very important management doesn t listen to our safety concerns production is more important Red Flags to OSHA inspector My employer has monetary incentives tied to low injury and illness rates Next step could be referral to OSHA 11(c) investigator Uniqueness to 11(c) Government has sole right of prosecution 127

24 Tips to Avoid Safety Complainant Good Safety Culture Employee safety concern Review concern If legitimate, address the issue If not, explain to the employee why there is no cause for concern Employees need to know there are other outlets to address safety concerns HR Other managers Try to satisfy concerned employees with internal procedures so they don t feel the need to report outside the organization 128

25 Sarbanes-Oxley, ACA, Food Safety Sarbanes-Oxley not just public companies anymore U.S. Supreme Court - Lawson v. FMR LLC contractor to public company Scenario Employee notices improper practices or, what the employee reasonably believes to be improper practices Employer terminates employee for making false claims OSHA tasked with investigation, but private right of action for employee Cases are reviewed by OSHA, but further review comes from administrative law judges 129

26 Tips for Employers Prepare statement of position to agency investigating whistleblower claims (perhaps with accompanying affidavits) Prepare management employees for interviews by investigating agency/ participation in interviews Prepare non-management employees for interviews if outside counsel involved, explain role of company s counsel vs. attorney representing employee / may or may not be able to participate in interviews Participate in interview of whistleblower, if still employed Caution make sure no further retaliation Provide additional information to investigating agency Be aware that a unionize facility could have union counsel assisting Be aware that for all except 11(c) complaints, employee may have private counsel assisting 130

27 Other Whistleblowers Bounty whistleblowers False Claims Act/Qui Tam employee can get recovery for bringing allegations to government Employee files complaint in court (usually sealed action) DOJ has 60 days to investigate Employee can continue to pursue claim or DOJ can take up action Whistleblower protections Dodd Frank Investigations by SEC of improper financial activities Monetary incentives to employees Private right of action Protections for participation in actions 131

28 Bounty Whistleblowers Scenario Employee aware of improper activity Gathers documentation Trade Secret confidential business information? Maybe, but many cases have held that if it demonstrates truth of claim, can be used Sometimes results in actions by employer against employee Big money cases 15 to 25% of recovery in many cases for FCA 10 to 30 % under Dodd Frank Recent case alleged fraud with regard to $874M in equipment purchased by USPS (Aug. 2014) 132

29 Tips to Avoid Whistleblower Activity Internal Reporting Prompt and thorough investigations Clear policy prohibiting retaliation Make sure your policy states retaliation specifically Policy allowing reports to external agencies Anything that would discourage such reporting can be a problem Training for all managers to understand the potential for whistleblower activity Monitor terminations Angry employees often become after the fact whistleblowers Still must prove all elements of their claims, but can create a headache for the employer Be aware of making someone a whistleblower during a termination 133

30 Questions? THANK YOU FOR ATTENDING! 134