Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘Whistleblowing’

The Legal Implications of Online Whistleblowing

Wednesday, July 10th, 2013

davidyamadaIn Monday’s news, the Golden Corral discount buffet chain got some unwanted national publicity when the YouTube video above, showing how raw meat and other foodstuffs to be served to customers was stored outside near a dumpster at one of its Florida restaurants, went viral. The video was taken supposedly during a health inspection(!) and posted by one of its own chefs. (For details about this incident and similar instances involving the retail food industry, see Olivia Waxman’s article for Timehere.)

Online whistleblowing

The posting of the video to YouTube was a classic example of online whistleblowing.

Websites, blogs, and social media in general have given rise to workers sharing stories of illegal and unethical behavior online, sometimes in lieu of pursuing internal reporting and legal complaint options that they believe will be ineffective. With the ready availability of public forums such as YouTube and Facebook and work-specific sites such eBossWatch and Glassdoor, workers can take their concerns directly to a broader audience.

Some forms of online whistleblowing involve self-identification; others are anonymous. Some mention specific employers and bosses; others do not.

Legal implications

Such online expression should be undertaken with caution, because questions of whether or not it is protected under the law are far from settled.

The Golden Corral chef who posted the video apparently has not lost his job. If he’s fired, it’s possible he’ll have a legal claim under some food safety law, or perhaps a state-based claim for wrongful termination on grounds that his termination violated public policy.

Nevertheless, we need to start with the fact that most U.S. workers are hired at will, which means that they can be fired for any reason or no reason at all. Finding an exception to this broad rule would be the main challenge facing any lawyer representing  a client who was fired for online whistleblowing.

Don’t count on claiming First Amendment protections. Private sector workers are not covered by the First Amendment’s free-speech protections, with one exception (Connecticut); public sector workers are covered only in limited instances when the expression relates to a public concern.

Various whistleblower laws and anti-retaliation provisions are most applicable when someone has filed a formal complaint or at least reported illegal or unethical behavior internally. These protections, on the whole, are less to cover reports posted to various Internet sites.

During the past two years, media coverage of National Labor Relations Board decisions concerning social media has led some people to believe (erroneously) that they have a more or less absolute right to criticize their boss on Facebook. It would take a legal memo for me to explain all the reasons why this is not true. Some workers, mostly union members and non-management employees acting as a group, would be covered. Most other employees would not.

It is worth adding that not all unethical behavior raises a direct legal issue. Also, a wrongful accusation of illegal or unethical behavior posted publicly could lead to a defamation claim, especially if it receives widespread attention.

For more

For those interested in learning about the legal and public policy implications of online whistleblowing concerning employment conditions, Professor Miriam Cherry of St. Louis University School of Law has authored a 2012 law review article, “Virtual Whistleblowing” (link to pdf). Here’s the abstract posted to her Social Science Research Network page:

“With the advent of YouTube, blogs, social networking, and whistleblower websites such as WikiLeaks, the paradigm of whistleblowing is changing. The new paradigm for “virtual whistleblowing” is increasingly online, networked, and anonymous. While whistleblowing can take place in many contexts, this symposium article concentrates on the impact of technological changes on employment law whistleblowing. My contention for some time has been that existing regulation has been inadequate to cover existing forms of whistleblowing. Therefore, it is not surprising that existing whistleblowing laws have also failed to keep pace with the changes brought by modern technology. If older laws cannot be made to fit the new paradigm of virtual work, it is necessary to reassess and determine what changes in the law might fit new forms of whistleblowing more appropriately. This article hopes to begin that conversation.”

As Prof. Cherry’s article indicates, this is a murky area under current employment laws for workers and their employers alike. Those who contemplate engaging in some type of virtual whistleblowing should not blithely assume that their identities cannot be discovered or that the law protects them from retaliation. In situations where these factors matter, it would be prudent to obtain legal advice.

This article was originally printed on Minding the Workplace on July 9, 2013.  Reprinted with permission.

About the Author: David Yamada is a tenured Professor of Law and Director of the New Workplace Institute at Suffolk University Law School in Boston.  He is an internationally recognized authority on the legal aspects of workplace bullying, and he is author of model anti-bullying legislation — dubbed the Healthy Workplace Bill — that has become the template for law reform efforts across the country.  In addition to teaching at Suffolk, he holds numerous leadership positions in non-profit and policy advocacy organizations.

 

The Missing Link in Corporate Deviance

Thursday, April 28th, 2011

Jesci“It was a choiceless choice,” claimed Janet Chandler last Thursday night in a special discussion panel put together by GAP (Government Accountability Project) and Georgetown Law. Her choice was to blow the whistle.

Janet was one of three famous whistleblowers on the panel Thursday night discussing their stories and promoting the new book, The Corporate Whistleblower’s Survival Guide by Dylan Blaylock. Whistleblower Larry King, who blew the whistle while project manager for the cleanup at the infamous Three Mile Island nuclear power plant meltdown said he wished there was a comprehensive guide around like this when he chose to blow the whistle. Larry’s efforts uncovering reckless cleanup practices may have helped avoid another huge disaster and saved lives. He had no idea what would happen to him and his family, and not only did he lose his job, but his house as well. He also spent time in the hospital battling bouts of depression. He claimed if he had to do it all over again he would, knowing the dangers that can occur in his line of work. Although he said he would have remained anonymous, had he known it was an option. When asked why he did it, knowing some of the consequences, he exclaimed, “At the end of the day, you have to be able to stand yourself.”

Janet took her case all the way to a Supreme Court victory on a False Claims Act lawsuit against a hospital she was working with. (whistleblowers.org). She was working with federal funds granted to the hospital for supporting mothers and children suffering from drug addictions. The money granted was not allocated correctly, while the hospital was forging data and failing to comply with regulations. She said she was not prepared for the consequences which followed her blowing the whistle. She struggled for years as a single mother during the litigation process which took over 12 years.

Finally, Wendell Potter shared his story as a former VP for Corporate Communications with CIGNA, one of the U.S.’s largest health insurance companies. He spoke out about the deceitful tactics used in the private health care industry leading to more Americans without insurance protection. He also discussed the questionable uses of public relations budgets used to deceive the public, and engage in advertising and lobbying efforts to defeat reform initiatives in congress. (wendellpotter.org). Potter even wrote a book, The Deadly Spin, to detail what he experienced and how the company was deceiving Americans. Wendell took full advantage of his situation by turning it into a career. He now works with and provides education to members of Congress about what the private health insurance industry is really like.

Wendell said if he had not blown the whistle, he would not have gotten the wonderful opportunity to educate people on what the industry is really like. Similarly, Janet has participated in mentoring programs to educate and get the word out about whistleblowing. All of them agree that it was something they had to do to help others. They encourage people in their situations to speak out and use resources like the new book out to help them through these tough situations. Whistleblowers provide the missing link in exposing bad corporate practices.

We can only hope more brave souls will come forward like these three individuals and help ride corporate deviance and illegal practices.

About the Author: Jesci Drake is a current law student and intern with Workplace Fairness.

Dodd-Frank Bill Provides Robust Whistleblower Protections

Friday, July 16th, 2010

jason zuckermanRecognizing that robust whistleblower protection is critical to preventing another financial crisis, Congress included in the Dodd-Frank financial services reform bill (H.R. 4173) numerous provisions designed to encourage whistleblowing and to provide robust protection from retaliation.  These provisions create monetary awards for whistleblowers who provide original information to the SEC or CFTC, strengthen the whistleblower protection provisions of the Sarbanes-Oxley Act and the False Claims Act, and create additional whistleblower retaliation causes of action.

Reward for Whistleblowing to the SEC and Prohibition Against Retaliation (Section 922). Under Section 922, the SEC will be required to pay a reward to individuals who provide original information to the SEC which results in monetary sanctions exceeding $1 million.  The award will range from 10 to 30 percent of the amount recouped and the amount of the award shall be at the discretion of the SEC.   Factors to be considered in determining the amount of the award include the significance of the information provided by the whistleblower, the degree of assistance provided by the whistleblower, the programmatic interest of the SEC in deterring violations of the securities laws by making awards to whistleblowers, and other factors that the SEC may establish by rule or regulation.  If the amount awarded is less than 10 percent or more than 30 percent of the amount recouped, a whistleblower may appeal the SEC’s determination by filing an appeal in the appropriate federal court of appeals within 30 days of the determination.

Section 922 prohibits the SEC from providing an award to a whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower provided information; who gains the information by auditing financial statements as required under the securities laws; who fails to submit information to the SEC as required by an SEC rule; or who is an employee of the DOJ or an appropriate regulatory agency, an SRO, the PCAOB or a law enforcement organization.

Section 922 creates a new private right of action for employees who have suffered retaliation “because of any lawful act done by the whistleblower– ‘(i) in providing information to the Commission in accordance with [the whistleblower incentive section]; (ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or (iii) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002,’” the Securities Exchange Act of 1934, and “‘any other law, rule, or regulation subject to the jurisdiction of the [SEC].’”  The action may be brought in federal court and remedies include reinstatement, double back pay with interest, as well as litigation costs, expert witness fees, and reasonable attorney’s fees.

New Whistleblower Protection for Financial Services Employees (Section 1057). Section 1057 creates a robust private right of action for employees in the financial services industry who suffer retaliation for disclosing information about fraudulent or unlawful conduct related to the offering or provision of a consumer financial product or service.  The scope of coverage is quite broad in that Section 1057 applies to organizations that extend credit or service or broker loans; provide real estate settlement services or perform property appraisals; provide financial advisory services to consumers relating to proprietary financial products, including credit counseling; or collect, analyze, maintain, or provide consumer report information or other account information in connection with any decision regarding the offering or provision of a consumer financial product or service.

Section 1057 prohibits retaliation against an employee who has engaged in any of the following protected acts:

• Provided, caused to be provided, or is about to provide or cause to be provided, to an employer, the newly created Bureau of Consumer Financial Protection (Bureau), or any other government authority or law enforcement agency, information that the employee reasonably believes relates to any violation of any provision of Title X of the bill, which establishes new consumer financial protections, or any rule, order, standard or prohibition prescribed or enforced by the Bureau;

• Testified or will testify in a proceeding resulting from the administration or enforcement of any provision of Title X;

• Filed, instituted, or caused to be filed or instituted any proceeding under any federal consumer financial law; or

• Objected to, or refused to participate in any activity, practice, or assigned task that the employee reasonably believes to be a violation of any law, rule, standard, or prohibition subject to the jurisdiction of, or enforceable, by the Bureau.

Remedies include reinstatement, backpay, compensatory damages, and attorney’s fees and litigation costs, including expert witness fees.  Where reinstatement is unavailable or impractical, front pay may be awarded.

Section 1057 employs a burden-shifting framework that is favorable to employees.  A complainant can prevail merely by showing by a preponderance of the evidence that her protected activity was a contributing factor in the unfavorable action. A contributing factor is any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision.  Once a complainant meets her burden by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee’s protected conduct.

The procedures governing Section 1057 claims are substantially similar to those governing retaliation claims brought under the Consumer Product Safety Improvement Act of 2008, 15 U.S.C. § 2087.  The statute of limitations is 180 days and the claim must be filed initially with the Occupational Safety Health Administration (OSHA), which will investigate the complaint and can order preliminary reinstatement.  Once OSHA issues its findings, either party can request a hearing before a Department of Labor (DOL) administrative law judge.  If the DOL has not issued a final order within 210 days of the filing of the complaint, the complainant has the option to remove the claim to federal court and either party can request a trial by jury.  Section 1057 claims are exempt from mandatory arbitration agreements.

Reward for Whistleblowing to the CFTC (Section 748). Section 748 amends the Commodity Exchange Act, 7 U.S.C. § 1 et seq., to create a whistleblower incentive program and whistleblower protections similar to those in section 922, including a new private right of action.  One notable difference between sections 748 and 922 is the ability of a commodity whistleblower to appeal any determination regarding an award made by the Commodity Futures Trading Commission (CFTC) within 30 days.  Protected conduct under section 748 includes providing information to the CFTC in accordance with the whistleblower incentive provision and “assisting in any investigation or judicial or administrative action of the [CFTC] based upon or related to such information.”

Strengthening Sarbanes-Oxley’s Whistleblower Protection Provision (Sections 922 and 922A). Sections 922 and 929A contain important amendments to the Sarbanes-Oxley act (SOX) that broaden the scope of coverage, increase the statute of limitations, exempt SOX whistleblower claims from mandatory arbitration, and clarify that SOX claims removed to federal court can be tried before a jury.

Section 929A clarifies that the whistleblower protection provision of the Sarbanes-Oxley Act (SOX), 18 U.S.C. § 1514A, applies to employees of subsidiaries of publicly-traded companies “whose financial information is included in the consolidated financial statements of [a publicly] traded company.”  This amendment eliminates a significant loophole that some courts have read into SOX that has substantially narrowed the scope of SOX coverage.  Elevating form over substance, some judges have permitted publicly-traded companies to avoid liability under SOX merely because the parent company that files reports with the SEC has few, if any, direct employees, and instead employs most of its workforce through non-publicly traded subsidiaries.

As Judge Levin pointed in Morefield v. Exelon Servs., Inc., ALJ No. 2004-SOX-002 (ALJ Jan. 28, 2004), this loophole is contrary to the purpose of SOX in that “[a] publicly traded corporation is, for Sarbanes-Oxley purposes, the sum of its constituent units; and Congress insisted upon accuracy and integrity in financial reporting at all levels of the corporate structure, including the non-publicly traded subsidiaries . . . [Congress] imposed reforms upon the publicly traded company, and through it, to its entire corporate organization.”  Section 922(b) further expands the coverage of section 806 of SOX to include employees of nationally recognized statistical ratings organizations (NRSROs), including A.M. Best Company, Inc., Moody’s Investors Service, Inc., and Standard & Poor’s Ratings Service.

Section 922(c) increases the statute of limitations for SOX whistleblower claims from 90 to 180 days and clarifies that SOX retaliation plaintiffs can elect to try their cases in federal court before a jury.  In addition, section 922(c) declares void any “agreement, policy form, or condition of employment, including a predispute arbitration agreement” which waives the rights and remedies afforded to SOX whistleblowers.

Strengthening the False Claims Act’s Whistleblower Protection Provision (Section 1079B). Section 1079B amends the anti-retaliation provision of the False Claims Act, 31 U.S.C. § 3730(h), by expanding the definition of protected conduct to include “lawful acts done by the employee, contractor, or agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of [the False Claims Act],” thereby protecting against associational discrimination and covering a broad range of activities that could further a potential qui tam action or could stop a violation of the FCA.  Section 1079B clarifies that the statute of limitations for actions brought under section 3730(h) is three years, which brings much-needed clarity in the wake of the Supreme Court’s decision in Graham County Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 545 U.S. 409 (2005) holding that the most closely analogous state statute of limitations applies to FCA retaliation claims.

“This article was originally posted on http://employmentlawgroupblog.com/”

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