Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

The White House has announced that today President Barack Obama signed into law the Veterans' Benefits Act (VBA) of 2010. Among other improvements in the law for veterans, the VBA enhances the employee protections of the Uniformed Services Employment and Reemployment Rights Act (USERRA). USERRA protects service members from employment discrimination and retaliation on account of their service. It is particularly important for members of the reserves who face retaliation for their periodic absences from work, and their inability to schedule reserve duties around an employer's preferences.

The VBA amends USERRA, 38 U.S.C. § 4303(2), to make clear that employees are protected from discrimination in their wages and benefits. In 2002, the Eighth Circuit U.S. Court of Appeals held that USERRA exempted wages and benefits from protection against discrimination. Gagnon v. Sprint Corp., 284 F.3d 839, 852-53 (8th Cir. 2002).

VBA also adopts a multi-factor test to determine if a successor company is liable for the USERRA violations of a predecessor company. Too frequently, employers use a shell game of changing ownership to evade liability for their actions. The Department of Labor adopted a regulation to allow a wise look at all the circumstances to determine if the new company should be held liable for the previous company's violation. 20 C.F.R. § 1002.35. However, the Eleventh Circuit narrowed the application of this rule by requiring that there be a merger or a transfer of assets before successor liability can be imposed. Coffman v. Chugach Support Services, Inc., 411 F.3d 1231, 1237 (11th Cir. 2005). Both Gagnon and Coffman are now ineffective as Congress has changed the law to specifically require the opposite result.

The VBA adds that the amendments "shall apply" to any violation of USERRA "that occurs before, on, or after the date of the enactment of this Act," and to all USERRA actions "that are pending on or after the date of the enactment of this Act." Congress is wising up to the ways courts resist applying remedial laws to accomplish their purposes. USERRA has been a harbinger of legislative refinements to anti-discrimination laws, and I look forward to Congress exercising this type of wisdom when it updates other employee protection laws.

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In an editorial yesterday, the Charleston Gazette of West Virginia called on Congress to pass a law to modernize the legal protections for workplace health and safety whistleblowers. "Whistleblowers protect the health and safety of working Americans by exposing unsafe conditions," the editorial begins. It then recounts how the Government Accountability Office (GAO) report found that the Department of Labor's whistleblower protection program could do a better job of protecting whistleblowers. One could also add the DOL's Inspector General's report. Recalling the Upper Big Branch mine disaster, and the Deepwater Horizon explosion, the editorial suggests, "If whistleblowers had been protected, those tragedies might have been prevented." It then quotes Rep. George Miller, D-Calif., as saying, "I will continue to work with my colleagues and the Secretary of Labor to modernize anti-retaliation protections as part of the Robert C. Byrd Miners Safety and Health Act." I remember attending a hearing on the Protecting America's Workers Act (PAWA) that would modernize Section 11(c) of the Occupational Safety and Health Act (OSH Act).  If including PAWA in the Robert C. Byrd Miners Safety and Health Act will get it passed, I can be all for that. Rep. Miller introduced H.R.5663, the Robert C. Byrd Miners Safety and Health Act, last July. The House Judiciary Committee reported it out on July 29, 2010. As reported out, Section 701 of the bill contains a gold-standard of whistleblower protection to replace Section 11(c) of the old OSH Act.  Sen. Jay Rockefeller of West Virginia has introduced a companion bill, S. 3671.  It is still waiting for action by the Senate committee. "Passing stronger whistleblower protections would be a tribute to West Virginia's late senator," the Charleston Gazette says.  I agree.

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In 2001, Eugene McErlean was working for the giant Allied Irish Banks (AIB) as an internal auditor. He discovered that his employer had been overcharging customers for exchanges from foreign currencies.  In over 3 million transactions, AIB had run up overcharges now valued at over €34 million ($47 million). McErlean reported his findings and his superiors seemed to share his concern, but nothing happened.  Then he went to Irish regulators with a report about his concern. The regulators did nothing, but in 2002 his boss insisted that he retract all his allegations. He refused and soon found himself looking for a new job.  In 2004, the overcharges became a national scandal. Now AIB has set aside €50 million ($69 million) to cover the cost of refunds.

Last year, outgoing AIB boss Eugene Sheehy apologized to McErlean. According to the Irish Independent, Sheehy told a provincial House committee that McErlean, "undertook the role of auditor in a highly professional, competent and effective manner. Eugene was not dismissed by AIB." McErlean was gracious in accepting the apology, and indicated that he was more concerned with the failure of Irish regulators to respond to his 2001 concerns. As the Independent stated last year, "The discredited watchdog would now be better off following Sheehy's example and emerging from the Dame Street bunker waving the white flag."

A year later, that watchdog is now waving that white flag. Today's Independent is reporting that Financial Regulator Matthew Elderfield will testify tomorrow to Ireland's parliament (called the Oireachtas) and convey his agency's apology for its past mistreatment of McErlean and his concerns. Elderfield called McErlean yesterday to convey his apology yesterday.

I can add two postscripts. Wikipedia is still reporting that to this day, AIB has not disciplined anyone for knowingly making the illegal overcharges. The overcharges were made for eight years, and various managers knew about them while there were going on. Also, since this scandal erupted, AIB purchased a large share of M&T Bank of Buffalo, New York.

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The Philippine Daily Inquirer reports that the Philippine Bureau of Customs has filed charges that Oillink, an import company, cheated the government out of 700 million Philippine pesos (16 million US dollars). The Bureau of Customs discovered the fraud through an anonymous letter, apparently from a disgruntled employee. In a column, Raul Palabrica says, "It takes a lot of guts for a person to provide inside information to the authorities that could lead to the imprisonment of the people he once worked with or whose table he may have shared on several occasions." "And once the whistle is blown, there is no assurance that the whistle-blower will not be caught in the maelstrom that his action may have caused," Palabrica adds. He also comments on the predicament of UBS whistleblower Brad Birkenfeld.  Birkenfeld's disclosures, he says,

resulted in the rest of the safe banking havens based in Lichtenstein, Cayman Islands and other exotic places into doing something similar under pain of being accused of money laundering and blacklisted in the international banking community.

So you think the whistle-blower was declared a hero for initiating the action that practically turned upside down tax haven banks?

No! Instead, he was tried and found guilty of abetting tax evasion and sentenced to 40 months in jail.

That is suffering for speaking truth to power.

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