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

In another innovation, DOL is creating a new option for OSHA, allowing it to order an "economic reinstatement" rather than the unlimited "reinstatement" provided by the statute. The CPSIA, at 15 U.S.C. § 2087(b)(3)(B)(ii) provides that when OSHA finds a violation, it shall order the violator, "to reinstate the complainant to his or her former position together with compensation (including back pay) and restore the terms, conditions, and privileges associated with his or her employment; . . .." Now, OSHA is saying that in "appropriate circumstances," it may find that a productive and amicable working relationship would be impossible. In my experience, there is usually a period of awkwardness when a whistleblower is reinstated after a discharge.  It usually wears off after a short time.  In one case, a reinstated whistleblower later received the "employee of the year" award.  In cases where the whistleblower does not feel safe returning, he or she might agree to an "economic reinstatement." In all other cases, Congress made clear that reinstatement must include "the terms, conditions, and privileges associated with [the] employment." Congress naturally feels that the public interest would be served by having whistleblowers in the positions where they can observe and stop wrongdoing.

At 29 CFR § 1983.107(d), DOL makes clear that the Rules of Evidence do not apply, so whistleblowers and employers can use hearsay evidence. At page 40500, DOL states, "whistleblowers often appear pro se and may be disadvantaged by strict adherence to formal rules of evidence. Furthermore, hearsay evidence is often appropriate in whistleblower cases, as there often are no relevant documents or witnesses other than hearsay to prove discriminatory intent." This provision is helpful to whistleblowers.

My biggest gripe about the DOL rules for whistleblower cases is the requirement that a petition for review state all the grounds on which review is sought. DOL regulations provided that failure to list an issue would ordinarily lead the ARB to consider it waived.  DOL only allowed ten (10) days from the date of an ALJ decision to prepare and file the petition for review.  For me, this is not enough time to analyze all the ALJ orders, rulings during the hearing, and findings in the decision and write even a list of the issues I might raise.  Myself, I do not recall the ARB ever saying I waived an issue, but I do recall one time when they let an employer object to my fee claim which had been unopposed before the ALJ.  To me, the rule on listing the issues in the petition for review is oppressive, and serves no purpose other than to create a hurdle that will allow the ARB to avoid some issues on a technicality.  The ARB's legitimate interest in reviewing the petition to assure that there are good grounds for briefing is served by requiring a petition to state some good grounds for review.  For this purpose, the petition would not need to list all the grounds that might be raised later in the brief. The opponent will have plenty of time to respond to issues in the briefs. In response to my objection, DOL has changed 29 CFR § 1983.110(a) to provide that the ARB "may" deem an issue waived. This provision leaves employers and whistleblowers alike wondering when the ARB will enforce a technicality and when it will decide an issue on the merits. All parties deserve a process that focuses on the merits, and I remain in waiting for the day when DOL will say so. At page 40501 of the discussion, DOL notes that the ARB has considered the merits of some issues in some cases that were not raised in the petition for review. DOL also extended the time to file a petition for review from ten (10) to fourteen (14) days. I had asked for thirty (30) days. DOL also states that parties can seek an extension of the fourteen day period.

Thankfully, DOL has eliminated the requirement that parties serve notice of intent to file in U.S. District Court at least fifteen (15) days before filing.  This rule created another unnecessary technicality that could trip up whistleblowers. Now, 29 CFR § 1983.114(b) requires that complainants give DOL notice of filing with a District Court within seven (7) days after such filing. This change eliminates the prospect that giving OSHA fifteen (15) days advance notice of intent to go to federal court could allow OSHA to hurry up and issue a determination that could be used against the complainant.  At page 40502, DOL credits NWC's comment as the inspiration for this change.

With the two exceptions noted above (about limiting discovery and economic reinstatements), these rules are an improvement over the rules of years gone by.  Strangely, though, the CPSIA has not been a popular choice for whistleblowers. According to OSHA's latest statistics, it has received only 17 CPSIA complaints in the last five years.  Of those, OSHA has dismissed ten (10), and settled two (2).  One (1) was withdrawn and that leaves four (4) still pending. By comparison, last year OSHA ruled on 1,277 complaints under OSH Act Section 11(c), 244 truck driver cases, 173 railroad cases and 156 SOX cases.  All tolled, it found merit in 55 cases, dismissed 1,103 cases, and settled 399 cases. Under the CPSIA, OSHA still has not found its first meritorious case. Work remains to be done to educate the public about the variety of whistleblower laws that might protect them, including the CPSIA.

In a significant policy improvement, the new regulations eliminate the former requirement that whistleblowers give the Department 15 days advance notice before filing a complaint in U.S. district court. This requirement is not contained in the SOX Act, and my comments point out how legal precedent made the rule invalid. Department of Labor (DOL) staff could have used the 15-day notice to hurry the issuance of a final decision and deprive the district court of jurisdiction. This use would have been contrary to the remedial purpose for which Congress created the "kickout" provision. The new  29 CFR § 1980.114(b)  requires whistleblowers to give the Department notice of an action in U.S. district court within seven (7) days of filing the action. I thank the Department for removing this unnecessary hurdle to deciding SOX cases on the merits.

However, the modified rules preserve another unnecessary hurdle to deciding SOX cases on the merits. Section 1980.110(a) requires that to appeal a bad decision by an Administrative Law Judge (ALJ), a party must file a petition for review with the Administrative Review Board (ARB) within ten (10) days of when the ALJ issued the decision (not the date on which the decision is received), and that petition must describe all the legal issues on which the party seeks ARB review. This is a very difficult part of practicing before DOL. In normal appeals in court, a party has thirty (30) days to file a notice of appeal, and that notice does not have to say anything about the reasons for the appeal. The attorney then has time to review the whole record to set out the "assignments of error" in the brief. Not at the ARB. Section 1980.110(a) says that issues not set out in the petition for review will normally be waived. I could understand that the ARB wants to see that a petitioner has some good ground for the appeal before setting a briefing schedule. This goal can be accomplished by requiring the appellant to state some good reason for ARB review. The ARB's job of assessing worthiness for briefing is fully met by seeing at least one good issue for briefing.  The ARB has no need, at the petition level, to know all the reasons for review. The effect of a regulation that says issues are waived is to prevent good issues from being decided on the merits just because the party could not make a complete list in the short time allowed. That is contrary to the purpose of a whistleblower protection, and even of due process itself.  I suggested that DOL eliminate the waiver rule and allow thirty (30) days to submit a petition for review. I also suggested that the regulations make public an ARB practice of allowing a party to make a motion for extension of time to set out the grounds for review.

I also suggest that SOL make explicit that SOX has extraterritorial effect -- the same extraterritorial effect that the Securities Exchange Commission (SEC) applies. This provision in the regulations would save much time and confusion in litigation over the scope of extraterritorial effect of SOX. It would also help fulfill the purposes of SOX which was born after Enron abused off-shore subsidiaries to scam the investing public.  The rule would be especially important for whistleblowers disclosing bribery of officials in other countries -- a violation of the Foreign Corrupt Practices Act (FCPA).

Finally, I suggested that DOL take a cue from the Dodd-Frank provisions for confidentiality. Congress made clear that for some whistleblowers, the risk of public disclosure of their whistleblowing will discourage them from coming forward. It provided for confidentiality of those who raise concerns about violations. See 15 U.S.C. 78u-6(h)(2). The SEC regulations provide for awards to confidential and even anonymous whistleblowers. See SEC Rule 240.21F-7. Even the U.S. Tax Court recognized the public interest in allowing whistleblowers to make their claims anonymously. See Whistleblower 14106-10W v. Commissioner of Internal Revenue, 137 T.C. No. 15 (12-8-2011). My comments give the DOL language they could use to protect the identity of whistleblowers in the DOL process.

Here are links to:

DOL's announcement of the modified SOX regulations

NWC's comments in PDF format

NWC's comments in TXT format

The Department is standing by its policy of allowing whistleblowers to establish a claim by showing that their protected activity was a "motivating factor" in the adverse action. This policy follows the Supreme Court's standard for Title VII claims announced in Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274 (1977), and Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). The Department rejected application of Gross v. FBL Financial Services, Inc., 129 S. Ct. 2343 (2009). Gross limited the means of proving age discrimination due to the legislative history of the Age Discrimination in Employment Act (ADEA). Therefore, Gross will not apply in DOL whistleblower matters. The "motivating factor" test also means that whistleblowers do not have to prove that the employer's stated reason is false. Even if an employer's stated reason is true, a whistleblower can still prevail if the employer was also motivated by retaliation against the protected activity.  It will be up to the employer to prove that the reasons can be separated, and that the adverse action would have happened even without the protected activity.

Jason Zuckerman and I had asked the Department to require OSHA investigators to meet privately with witnesses who are still employed by the respondent.  Too often, company lawyers insist on being present with all company employees when OSHA interviews them.  The presence of the boss's attorney can have an intimidating effect on employees who just saw one of their buddies get fired.  While the Department decided against a formal regulation, it did announce that OSHA policy is to conduct private meetings with non-management employee witnesses.  If anyone has a contrary experience, it would be good to track that here.  Just leave a comment to this blog using the form below.

Bowing to the improved legal standard for adverse actions, the regulations now use the phrase "adverse action" instead of "unfavorable personnel action." In Burlington N. & S. F. R. Co. v. White, 548 U. S. 53 (2006), the Supreme Court made clear that adverse actions outside of employment could be unlawful.  Without citing to Burlington, the Department adopts this reasoning. This could support a whistleblower when an employer acts outside of employment relationship by filing criminal charges of a civil lawsuit, or by threatening violence or other harm to the whistleblower.

In 29 CFR § 24.105(c), the Department has helpfully made clear that the 30 days to object to an OSHA finding can run from the party's receipt of the finding, or the receipt by that party's attorney.  If this rule had been in effect in 2006, my client Harry Smith would not have had to appeal all the way to the Court of Appeals to get a hearing in his trucker driver case against CRST.

In 29 CFR § 24.107(b), the Department took out a sentence that the comments had objected to.  This sentence said, "Administrative law judges have broad discretion to limit discovery in order to expedite the hearing." Now that this sentence is removed, parties should be able to argue for completion of discovery, even if it takes longer.

For state employees, the Department of Labor says that OSHA will consider intervening in their whistleblower cases.  Such intervention is not required, but when OSHA does intervene, the state will not be able to use the Eleventh Amendment to duck compliance with the law. I expect that such intervention is more likely in cases where the OSHA investigation resulted in a finding of a violation by the state.

In my biggest disappointment about the new regulations, the Department is keeping the requirement in 29 CFR § 24.110(a) that a petition for review to the ARB must state all issues the petitioner will raise, and must do so within ten (10) days of the ALJ's decision. This is very different from the Federal Rules of Appellate Procedure where a party has 30 days to file a notice of appeal, and does not have to state the issues until the brief is submitted. This 10-day time limit remains a serious burden for parties and attorneys practicing before the Department of Labor.  Jason Zuckerman and I had suggested that it would be sufficient for the Department to require some statement of good cause for the petition, and then allow additional issues to be raised in the brief. The Department rejects this idea. It says ten days is enough.  It says that the ARB needs to know all the issues from the beginning. It adds, however, that:

it is not necessary that the petition identify each factual finding to which the party objects. Rather, it is sufficient that the petition generally identify the legal conclusions that are alleged to be erroneous. OSHA has amended these regulations accordingly.

The Department also rejected NWC's suggestion that the ARB should use a de novo standard, just as ALJ's do. The ARB wants to be more of an appellate body setting policy rather than a fact finding body. Given the wide variety of attitudes among the ALJs about whistleblower claims, this decision is a disappointment. Whistleblowers who get an unluck draw of an ALJ will suffer more as a result.

For 29 CFR § 24.114, the Department has removed language from the preamble that urged federal courts to respect the decisions of ALJs in cases removed to federal court. Although the Department does not cite to it, this change is in accordance with Stone v. Instrumentation Laboratory Co., 591 F.3d 239 (4th Cir. 12-31-2009). The federal court process is de novo. The Department is sticking with the rule that requires 15 days advance notice of going to federal court.  The ERA statute does not provide for any such limitation on going to federal court. The Department's response fails to explain how this rule is authorized by law, or in furtherance of the remedial purpose.  All the Department says is, "OSHA believes that this notice provision falls within the scope of these procedural rules." This is somewhat like an encyclopedia saying, "we don't know if an aardvark is an animal or not, but we are confident that it belongs in the first volume for words starting with A."

Putting these disappointments aside, the remainder of the rules and the Department's explanations, are helpful to the cause of protecting whistleblowers and advancing the law.  I thank the Department's staff for their tedious and thoughtful work in explaining their responses to our comments. The new regulations are certainly a must read for whistleblowers and their advocates.