Critical Issues in the Law and Their Impact in the Workplace:

Kathleen Bonczyk
November 27, 2006 — 3,067 views  
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Whistleblower and retaliation litigation are among the hottest and fastest-growing areas of employment law.  The public policies behind these statutes are self-evident.  Lawmakers recognize that individuals would be reluctant to oppose misconduct by higher-ups if they feared that they could be punished for asserting their rights, and a chilling effect might arise without a remedy against retribution.  Depending on the particular statute, whistleblower and anti-retaliation laws cover job applicants as well as employees, including full-time, part-time, seasonal, temporary, consultants, contractors, and subcontractors. Since a challenged action might occur at various points in the employment life cycle, from hiring through firing, the entire human resources function should be considered when evaluating strategies designed to lessen the possibility for liability.

Because there can be civil as well as criminal penalties to those who lash out against individuals engaging in protected activity, whistleblower and anti-retaliation laws operate as strong incentives for employers to avoid  reacting inappropriately when good-faith complaints are received.  Nonetheless, compliance initiatives aimed at minimizing the potential for legal exposure can be challenging to implement and manage.  However, in light of the possible criminal and civil penalties, negative publicity, and high defense costs associated with whistleblower and retaliation litigation, a concerted effort should be made to integrate appropriate policies, effective grievance procedures, and comprehensive training with the collective goal of preventing these lawsuits from arising.

Whistleblower Protection Statutes.

Various laws at the national and state level shield internal whistleblowers.  For example, the federal Occupational Safety and Health Act [i] protects those who blow the whistle on unsafe working conditions or health hazards at their places of employment.  An employee is entitled to refuse to work in situations where the environment is dangerous, and the Occupational Safety and Health Administration (OSHA) may seek criminal penalties when a willful violation of a specific standard resulting in the death of an employee occurs.  The Act proscribes the discrimination of employees for engaging in such protected activities as filing safety complaints with OSHA and for participating in an OSHA investigation.  Discrimination can include firing, laying off, demoting, failing to promote, disciplining, or intimidating the worker. Further, with respect to scenarios involving occupational injuries or illnesses, many jurisdictions have enacted state laws protecting claimants who are retaliated against for availing themselves of remedies afforded under the Workers Compensation Act.  Additionally, in certain instances, criminal penalties are available for fraudulent workers compensation practices.

Another statute to consider is Section 806 of the Corporate and Criminal Fraud Accountability Act, [ii] also known as the whistleblower provision of the celebrated Sarbanes-Oxley Act (“SOX”).  Whereas much has been said and written about the impact of SOX on contemporary corporate governance practices, including the availability of criminal penalties,    the statute’s whistleblower provision is less well-known.  Nonetheless, it provides a civil remedy for employees of publicly-traded companies and their wholly-owned subsidiaries who are punished for complaining about actions that equate fraud against shareholders.  Under SOX, the whistleblower is required to show at the preponderance of evidence standard, that he/she (1) engaged in protected whistle blowing activity; (2) the employer knew of the protected activity; (3) the employee suffered an unfavorable employment action, and (4) circumstances exist to suggest that the protected activity was a contributing factor to the unfavorable action.  Conversely, to avoid liability requires the defendant to demonstrate at the higher clear and convincing evidentiary standard that it still would have taken the same unfavorable personnel action against the employee even in the absence of protected activity.

Anti-Retaliation Laws.

During the last century, a number of employment laws were passed which were aimed at protecting the rights of workers.  In addition to the guarantees afforded under the substantive part of these statutes, most also prohibit employers from firing back at individuals who complain about unlawful conduct.  Significantly, it is not uncommon for a defendant to prevail on the underlying substantive discrimination count at the summary judgment stage of proceedings only to watch the retaliation claim survive and progress full steam ahead toward jury trial. The Fair Labor Standards Act (FLSA), [iii] which was enacted in 1938, includes an anti-retaliation provision.  The FLSA governs a company’s wage and hour practices while also barring the retaliation of employees who charge their employers with non-compliance with the Act.  This means that an employee who filed a grievance alleging that overtime pay was illegally withheld from his or her paycheck and was then terminated could bring a two-count action under the FLSA: The first for the substantive statutory violation of the Act and a second for retaliatory discharge.  The essential elements to a retaliation claim are:  (1) The applicant/employee voices opposition to an employment practice and/or participates in a compliant process (i.e. a harassment charge is lodged or the individual is a witness in an investigation); (2) subsequent adverse action by the prospective employer/employer (later, this person is not hired or is not selected for a promotional opportunity he or she applied for), and (3) a causal connection between the protected activity and the ensuing action exists. 

Additionally, the United States Supreme Court’s recent ruling in the case of Burlington Northern & Santa Fe Railway Company v. White, 126 S. Ct. 2405 (2006) redefined much of the law on retaliation and has enormous implications for employers. The Court determined that plaintiffs in retaliation lawsuits involving Title VII of the Civil Rights Act of 1964, [iv] the statute barring discrimination based on race, color, sex, religion, and national origin, need not prove the loss of a specific tangible employment term or benefit.  To prevail, plaintiffs must only show that the defendant’s actions were harmful enough to discourage reasonable employees or applicants from complaining about discrimination.  It is anticipated that the decision may result in the broadening of anti-retaliation provisions in the other major federal employment laws, including the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Fair Labor Standards Act. 

Anti-Retaliation/Whistleblower Protection Policies.

To avoid expensive and time-consuming litigation, employers should adopt zero tolerance standards and procedures. Key factors to consider in the development of company policies should include the following:

1.         A definition of retaliation and whistleblowing.
2.         A strong position statement that retaliation will not be tolerated.
3.         The repercussions for those found guilty of violating the policy.
4.         A description of the internal grievance reporting mechanism including                      who complaints should be directed to.
5.         The guarantee that the complainant will not suffer retribution for exercising the grievance procedure.
6.         Notification of all employees of the new policy by way of payroll mailers,                letters, emails, workplace postings alongside all other employee notices,
revisions to employee handbooks, and all employee meetings.
7.         And last but not least - comprehensive training.

Train, Train, Train.

Where anti-retaliation and whistle blowing compliance is concerned, employers may feel as though they are caught in a catch-22 of sorts.  On the one hand, without well-communicated policies and procedures, employers are at risk of litigation.  On the other hand, the implementation of this programming can lead to an opening of the floodgates of internal complaints.  Further, each complaint must be dealt with swiftly and responsibly, as a single mishandled grievance can have serious consequences. 

Still, proactive and comprehensive training constitutes the means to the end of a “win-win” scenario. This is because even the most artfully crafted policies and procedures will do little to close compliance gaps if managers and supervisors do not understand the fundamentally important role that they play in the big picture.  Consequently, organizational decision-makers must be trained on the basic provisions of the whistleblower and anti-retaliation laws to ensure that they fully understand how these statutes operate, their practical application in the workplace, the types of actions which could lead to litigation, and what they should do and not do in the event that a complaint is filed against them.  They must also be educated on effective documentation techniques so that they can properly substantiate the reasons why they took certain actions or made particular decisions involving protected activity. Months and possibly years down the line, the employer may be required to persuade an administrative investigator, administrative law judge, arbitration panel, or a jury that there was a legitimate basis for the supervisor or manager’s actions, and that it was not the product of illegal conduct.  Contemporaneous documentation takes center stage in employment litigation and constitutes key evidence in the employer’s defense strategy.  Thus, the supervisor or manager must be trained to know how and what to document.  In conclusion, because of all that is at stake, compliance with the whistleblower and anti-retaliation statutes should not be the product of a “hit or miss” endeavor, but an important aspect of the employer’s strategic plan. 

For More Information

Please attend  Lorman‘s “Employment Law A-Z“ seminar, or contact Kathleen M. Bonczyk, Esq., at or your company’s in-house counsel or outside counsel for additional information.

[i].  See The Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651, et seq.

[ii].  See Public Law 107-204, July 30, 2002; 18 U.S.C. Section 1514A

[iii].  See 29 U.S.C. Section 201, et seq.

[iv].  See 42 U.S.C. Section 2000e

Kathleen Bonczyk

Cathleen Scott, P.A.