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

On Apr 18, 2013, Rep. George Miller (D-CA) introduced bill to extend whistleblower protections to offshore oil and gas workers. Currently there is no federal law that protects oil and gas workers if they are retaliated against after they blow the whistle on workplace health and safety violations on the Outer Continental Shelf. Workers on oilrigs like the Deepwater Horizon risk losing their jobs if they report dangerous workplace conditions. The workers performing cleanup activities on the Outer Continental Shelf similarly have no protections against employer retaliation for raising health and safety concerns.

The Committee on Education and the Workforce Democrats issued a fact sheet about the Bill. The fact sheet calls for all workers to be protected when they blow the whistle on “concerns about unsafe working conditions” and to grant the workers the “right to stop working if they fear they could be injured or killed.”

“Employees are best situated to discover hazards in the work environment; they are the first line of detection and should be protected when raising concerns,” stated Stephen Kohn, Executive Director of the National Whistleblower Center. 

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British Member of Parliament Julian Smith (left in photo) today visited Stephen Kohn (right in photo) the Executive Director of the National Whistleblowers Center. Mr. Smith asked for the meeting to discuss how the United Kingdom might benefit from improved laws for whistleblowers and from an advocacy organization like NWC. Mr. Kohn explained how the United States has benefited from the False Claims Act, and has even used that law as a model for reward programs in the Dodd-Frank Act and in the Internal Revenue Service.

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In Nancy M. Modesitt’s recent research article “The Garcetti Virus,” she explains how a doctrine known as the job duties exclusion has come to erode protections once afforded to whistleblowers. She explains that this doctrine allows the discharge of an individual who discovers illegal activities while performing his or her job and then reports those issues to a supervisor. Although one might think the current whistleblower laws would protect such disclosures, Modesitt explains that is no longer the case.
Modesitt details how the the Federal Circuit created the job duties exclusion more than a decade ago in the case of Wills v. Department of Agriculture (1998). The case involved an employee in the Department of Agriculture who reported to his supervisor that a number of farms he had investigated were not complying with a government soil-protection program. The supervisor disagreed with the employee’s findings and overruled him on 6 of the 7 cases. The employee complained about the decision and later claimed that he was retaliated against for his comments. When the case was heard by the Federal Circuit, the court decided that the employees comments did not put him “at personal risk for the benefit of the public good.” As such, the court ruled that his comments could not “constitute a protected disclosure under the [Whistleblowers Protection Act (WPA)].” In later cases involving disclosures made by federal employees, the courts further limited the protection afforded to them for their whistleblower activities.

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Today, the New York City Council will vote on three whistleblower laws. I had the opportunity to testify about these three bills on April 16th this year before the Committee on Governmental Affairs. The NWC supports the NYC Council's efforts to improve whistleblower protections.

Proposed Int. No. 479-A requires city contractors and subcontractors to post a notice informing employees about their whistleblower rights. Knowledge of existing whistleblower laws is essential in encouraging employees to report fraud.

The NWC strongly supports Proposed Int. No. 816-A, which extends protections under New York City's Whistleblower Law to employees of city contractors and subcontractors.

Proposed Int. No. 828-A is a good first step in making the New York City False Claims Act more effective in detecting and deterring fraud. We look forward to working with the Council in the future to continue improving the Act to ensure accountability of city contractors.

If you would like to know more about these three bills check out the audio from the NYC Committee hearing or my written testimony.

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The City of Chicago Ethics Task Force released a report today that recommends that the City strengthen protections for whistleblowers.  Mayor Rahm Emanuel appointed the Task Force to improve the City's notorious record on ethics. Cindy Canary of the Illinois Campaign for Political Reform chairs the Task Force.

On page 29, Recommendation 16 notes that the City's Ethics Ordinance does not include "a generally applicable whistleblower provision." It notes that Chicago does have a more general whistleblower protection at 2‐152‐171(b)(1)‐(2), and the Task Force recommends that this ordinance be moved to the Ethics Ordinance. Merely moving the whistleblower provision, however, will not strengthen it.  The Task Force cites a 2009 survey by the Ethics Resource Center that found that 60% of City employees did not report misconduct out of fear of retaliation. The Task Force asked the City to publicize its whistleblower protection.

I can also suggest that the City's ordinance expand the scope of protected activity to include any lawful act taken to raise a concern about misconduct, and any refusal to comply with an order to engage in misconduct. The City's current whistleblower protection only protects disclosures to government agencies. Effective whistleblower remedies will include awards of compensatory damages, exemplary damages, attorneys fees and costs, and injunctive relief including reinstatement, expungement and posting.

Recommendation 15 could also become a concern for whistleblowers.  The Task Force wants the City Council to require that all employees report all misconduct they observe. This type of requirement can be used by managers to punish whistleblowers.  They could say that the employee did not report the misconduct fast enough, or through the right channels. If the City Council considers this recommendation, it should be mindful that the better policy will always leave every door open to those who want to raise their concerns.

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Yesterday, the Missouri House of Representatives passed a bill called the "Whistleblower's Protection Act," H.B. 2099. This bill is actually an attempt to weaken the protections Missouri courts already afford to whistleblowers.  Like courts in most states, Missouri courts recognize a common law tort claim for employees discharged in violation of a clear public policy. See Entwistle v. Missouri Youth Soccer Association, Inc., 259 S.W.3d 558, (Mo.2008). The Republican controlled legislature passed a similar bill earlier in the year, but Democratic Governor Jay Nixon vetoed it.  According to an Associated Press (AP) story, the present bill is slightly less severe than the prior bill. 

Still, H.B.2099 would limit punitive damages, exempt governmental agencies, and prohibit courts from expanding protections under the common law. The bill's definition of a "protected person" does not make clear that employees would be protected if they raise a concern based on a reasonable belief of a violation.  Courts might require employees to actually prove the violation to receive any protection. The bill also fails to specify a protection for those employees who raise concerns based on health, safety and environmental issues. The bill offers no assurance that employees could reach the courthouse if their employer uses forced arbitration agreements. The bill makes no provision for awards of attorneys fees, litigation costs and expert witness fees.

The bill's sponsor, Rep. Kevin Elmer, told the AP that his bill would provide clarity for businesses. He tacitly concedes that his bill does more than clarify existing law. "We're trying to balance the rights of individuals and the right to earn a living," said Elmer. Any "balancing" that wants to protect the public from frauds and dangers would make sure that all whistleblowers are fully protected. It remains to be seen if the bill can pass the Missouri Senate, and override an expected veto. We could also advance the cause of "clarifying" whistleblower protections for businesses by having the federal Congress pass a gold standard whistleblower protection for all employees.

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This Monday, April 16, 2012, NWC Director of Advocacy & Development Lindsey Williams will testify before the New York City Council in support of strengthening whistleblower protections included in proposed legislation, including the local False Claims Act. The hearing will commence at 10:00am in the 16th Floor Committee Room, 250 Broadway, New York, NY.

The City Council will broadcast a live webcast of the hearing.

New York is one of the few cities that has passed its own local False Claims Act in addition to state and federal versions of the law.  The local law is up now up for reauthorization, with proposed amendments that would update the definition of an “original source” and also increase the whistleblower’s share of the recovery.

In addition, Council Member Dan Garodnick has sponsored two bills that expand whistleblower rights. His first bill extends whistleblower protection to employees of city contractors, and his second bill requires city contractors to post information about whistleblower protections included in the local, state, and federal False Claims Acts.

Council Member Gardodnick will discuss the bills and the hearing in more detail during an interview on Honesty Without Fear, live this Tuesday, April 17, 2012, at 1:00pm.

We’ll post a round-up of the hearing here on on the Whistleblower Protection Blog, so stay tuned.

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Updated May 15, 2012, with an eighth way the Grimm Act would undermine the corporate whistleblower program.

Corporate criminals rejoice. The Grimm Act packs seven deadly punches for whistleblowers. This law would make it more difficult for employees to report Wall Street corruption, Ponzi schemes, and other fraud – not easier. What happened to Congress fighting fraud?

The leadership in the House of Representatives is positioning the Grimm Act (H.R. 2483) to move quickly through Congress. It’s a license to steal for Wall Street and big corporations. Here’s how:

1. Gag Orders Legalized

The Grimm Act permits companies to enforce, “any established employment agreements, workplace policies, or codes of conduct,” regardless of the impact on the right of an employee to report corporate crimes. This means that companies can force employees to sign agreements forfeiting their whistleblower rights.

2. Workplace Retaliation Legalized

“Any adverse action taken against a whistleblower for any violation of such agreements, policies, or codes shall not constitute retaliation.” It looks like retaliation, smells like retaliation, but it’s not retaliation. (Emphasis added to the bill text.)

3. Law Enforcement Crippled

The Grimm Act requires the SEC to, “promptly notify any entity that is to be subject to [an investigation]” before beginning an investigation. Tipping off companies suspected of violating the law allows the corporations to intimidate witnesses and tamper with evidence before the investigation begins.

4. Whistleblower Anonymity Destroyed

The Grimm Act allows, and in most cases requires, the SEC to, “disclose to the employer’s audit committee such information provided by the whistleblower.” This means that the SEC would not only be unable to guarantee confidentiality, but it would be required to turn whistleblowers over to the very corporations accused of wrongdoing.

5. Corporate Accountability Minimized

The Dodd-Frank Act provides incentives for companies to self-report violations, including reduced fines and penalties. The Grimm Act creates a gaping loophole, allowing companies to claim they self-reported even when a whistleblower makes a report to the SEC. This applies even if the company initially covered up problems and retaliated against the whistleblower.

6. Most Whistleblowers Disqualified

People found guilty of fraud are reasonably excluded from obtaining the benefits of the new SEC whistleblower program. However, the Grimm Act disqualifies employees who in any way “participated in” a violation. This subtle-but-deliberate disqualification in the Grimm Act would cut out the vast majority of whistleblowers from protection, as almost every whistleblower “participates” in the violations they uncover. Think of all the low- and mid-level employee¬s, such as secretaries who take phone calls and clerks who make photocopies. These people are “participating” in violations, and are therefore disqualified from the whistleblower program.

7. Awards Program Broken

The Grimm Act makes whistleblower awards discretionary, returning the SEC whistleblower program to its pre-Dodd Frank Act status. That version of the program was completely discredited by a 2010 report by the SEC Inspector General. The report showed that the SEC helped only five people and awarded only $159,537 during 20 years of operating a discretionary program. The report lamented that the discretionary program was, “not fundamentally well-designed to be successful,” and made recommendations that were implemented by the Dodd-Frank Act. The Grimm Act turns back the clock.

8. Justice Obstructed

The Grimm Act requires employees to make reports about their bosses to their bosses before going to law enforcement. As it turns out, this is the definition of obstruction of justice, a crime that packs a severe punishment. The federal obstruction of justice statute calls for prison sentences of up to 20 years for those who, bear with me now, "hinder, delay, or prevent the communication to a law enforcement officer or judge of the United States of information relating to the commission or possible commission of a Federal offense." Yes, laws are a bit wordy, but there's not much wiggle room here. The Grimm Act undermines the fundamental right for citizens to report wrongdoing to law enforcement. It's an obstruction of justice.

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If you want your Member of Congress to fight fraud and protect your investments, take action and ask them to oppose Wall Street’s license to steal. Share your thoughts about the Grimm Act in the comments.

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California Assemblyman Anthony Portantino (pictured; D-La Cañada Flintridge) has won committee approval for his bill to give employees in the Legislature the same protections afforded to other state workers when they report waste, fraud and abuse. Assembly Bill 1378 will give legislators and their employees protection from retaliation for reporting "improper governmental activity." The bill provides criminal and civil liability for violations. In a recent amendment, the bill limits the right to pursue civil remedies to employees, not legislators themselves. The Sacramento Bee reports that Assemblyman Portantino suffered retaliation himself after we was the lone Democrat to vote against a budget bill.  The Speaker slashed the budget for his office staff. Thus, when Assemblyman Portantino agreed to the amendment to limit civil claims to employees only, he was giving up his own rights for the sake of his employees. The outcome: a committee vote on January 10 with 10 votes in favor and no opposition. Congratulations!

UPDATE:  On January 19, 2012, the Sacramento Bee reported that A.B. 1378 died in the Assembly's Appropriations Committee. The bill did not get the required motion and second required for consideration. The State Auditor said that the bill would cost about $400,000 a year, and would put the Auditor's office in the position of investigating its own "client." It is hard to see how the anti-retaliation provision would interfere with the "independence" of her office. And if the anti-retaliation provision ends up costing the State money, it would probably be a result of liability for actual retaliation -- showing that there is a problem to be addressed. It is not unheard of, though, for a bill for transparency and against corruption and retaliation, gets buried through a procedure that does not require legislators to generate a record of who voted yes and who voted no.  Hopefully, California voters will call on members of the Appropriations Committee to explain why they did not make the required motion and second to advance A.B. 1378.

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Just before last night's deadline, I submitted comments on modifications to the Department of Labor's regulations for corporate fraud whistleblowers. The Occupational Safety and Health Administration (OSHA) originally issued regulations at 29 CFR Part 1980 to govern its whistleblower program under the 2002 Sarbanes-Oxley Act (SOX). The modifications OSHA published on November 3, 2011, reflect changes made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and also make some policy changes. I made my comments on behalf of the National Whistleblowers Center (NWC) with helpful input from NWC Executive Director Stephen M. Kohn (especially on the issues of extraterritoriality and confidentiality).  My colleague Erik Snyder helped me finish the comments in time for last night's deadline.

OSHA's modifications reflect the new expanded time limit for filing retaliation claims. Section 922(c) of Dodd-Frank extended the statutory filing period for SOX retaliation complaints from 90 to 180 days. 29 CFR § 1980.103(d) now requires claims to be filed within 180 days of the date on which the employee became aware of the violation. Section 922(c) also protects the whistleblower's right to a trial by jury in cases where the employee removes a case to U.S. district court. Section 922(c) invalidates pre-dispute arbitration agreements that would keep whistleblowers from using the Department of Labor process or the "kickout" provision for going to U.S. district court. Section 922(b) of Dodd-Frank expaned SOX's coverage to include employees of nationally recognized statistical rating organizations (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c). My colleague Lindsey Williams, Advocacy Director of NWC, reported on these changes when Dodd-Frank passed in 2010.

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