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SPLF Employment Blog


Whistle­blower Protection

It’s one thing to be fired or disciplined at work because of who you are. But sometimes, employees are disciplined or fired because they do the right thing. When an employee comes forward and reports illegal practices by company employees to HR or company management, that employee becomes a whistle­blower. Your employer cannot legally fire you for notifying it of this wrongdoing, but sometimes, companies would prefer that their dirty laundry stay hidden.

Federal and state laws may protect and even reward an employee who learns about fraud, rule breaking, or lawbreaking by his employer, supervisors, or colleagues. Telling HR about discrimination against others can have the added bonus of giving you protection where none otherwise exists. Let’s suppose that you are in management and are thus exempt from overtime. You know that your employer is not paying the overtime due to hourly workers. If you say nothing, you have no legal claim for anything. But if you tell human resources—always in writing—about what you know, and then you get fired, you have a claim for retaliation under the FLSA, which protects people who raise issues related to pay, even if the claim is not related to their own pay.

Perhaps the most important of these whistleblower statutes is the federal False Claims Act. President Abraham Lincoln signed the False Claims Act into law during the Civil War in an effort to uncover and stamp out fraud by military contractors. Today, the False Claims Act contains two important provisions for employees (or any person who discovers fraud being committed against the US government). The first of these provisions is called the qui tam provision, and it allows any person with knowledge of fraud against taxpayers to file a lawsuit in the federal government’s name, acting as a “citizen attorney general.” If that lawsuit ultimately leads to a recovery of money damages against the defendant, then the person who filed the lawsuit, called a “relator,” will receive a share of those damages of between 15 and 30 percent.

If a qui tam case is won at trial, those damages will likely be more than the actual fraud itself. Under the False Claims Act, a person who defrauds the government is liable for three times the amount of damages, plus a civil penalty. Therefore, in cases where the fraud is large, the incentives to come forward and file a qui tam claim can be tempting.

But the False Claims Act also has another provision important to workers, made necessary by an unfortunate truth: companies will sometimes go to great lengths to protect themselves and their income streams. That’s why the False Claims Act also contains an anti­retaliation provision that makes it illegal for employers to retaliate against employees who participate in or bring qui tam claims against their employers. Employees who successfully prove False Claims Act retaliation cases are entitled to reinstatement, two times the amount of their back pay, interest on that back pay, special damages, costs, and attorney’s fees.

However, the availability of monetary damages does not change one uncomfortable fact: being a whistleblower is hard. Qui tam cases often drag on for years, and the attorneys who represent False Claims Act relators often invest significant amounts of time and resources to prepare a case for filing. An employee who is considering initiating a qui tam case should discuss with her attorney whether the emotional and mental costs of being a relator outweigh the potential benefits she might realize years down the road. And the employee should have that conversation with her attorney sooner rather than later.

The False Claims Act contains important provisions that limit a relator’s right to bring a claim. First, no person can bring a qui tam case that is based upon information that has been publicly disclosed. One important exception exists: when the relator is the original source of the public disclosure, the relator’s qui tam case can proceed. Second, a qui tam case is available only to the first party who files it. The “first­to­file” requirement incentivizes employees with knowledge of fraud to speak with their attorney quickly and decide whether to pursue a qui tam case soon after learning of the fraud. The False Claims Act has been tremendously successful at rooting out fraud and corruption. In 2012 alone, the Department of Justice reported recovering $4.9 billion in False Claims Act cases. In fact, the act has been so successful that more than half of the states have enacted their own version of the False Claims Act, and more are likely to follow. These acts incentivize people to file qui tam cases involving fraud against state governments.

It’s true that the False Claims Act is an important tool for employees. It allows them to do the right thing by coming forward with knowledge of fraud. And it protects them from retaliation for doing so. But the False Claims Act is far from the only statute that protects whistle­blowers.

Some industries are subject to specific whistleblower protection laws based on the importance of safety and oversight in those fields. For example, the Atomic Energy Act of 1954 and the Energy Reorganization Act of 1974 protect employees of nuclear power plants and others with licenses to operate a nuclear reactor. Employees in that industry are protected against retaliation for reporting safety and regulatory violations to their superiors or to governmental agencies like the Nuclear Regulatory Commission. And the Toxic Substances Control Act contains provisions that protect employees who participate in proceedings to enforce the act’s requirements. Even employees of government contractors may have whistle­blower protections under the National Defense Authorization Act of 2013.

Employees who feel they’ve been retaliated against for reporting illegal or fraudulent behavior or safety violations should speak with their attorneys as soon as possible about the rights they may have. There are many whistleblower statutes, and an attorney who represents employees or whistle­blowers will be able to help a retaliated­-against employee learn whether her employer has violated a law.

Time limits can be short, so employees should speak with their attorneys quickly. For example, the Atomic Energy Act and the Energy Reorganization Act only protect employees who file a complaint within 180 days of the unlawful action. Other statutes have limitations as well, and a conversation with an attorney will help an employee know how much time she has to come forward with a claim.

Whistle­blower protections are an important part of a framework of laws that keep us safe, protect us against fraud, and penalize unscrupulous companies. Employees who take the risk of coming forward have special protections in some circumstances. Being a whistle­blower is difficult and can involve years of litigation. It is not for everyone. But when a whistle­blower teams up with a competent attorney, she might find herself well rewarded for her efforts, and society as a whole reaps the benefits of safer industries and less fraud.

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