Whistleblower Protection Laws - Revision history

Admin: /* Prohibited Whistleblower Retaliation */

2025-02-17T18:22:53Z

Prohibited Whistleblower Retaliation

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	*blacklisting		*blacklisting

			=='''Employee-Favorable Causation Standard and Burden of Proof'''==

			A complainant can prevail merely by showing by a preponderance of the evidence that her protected activity was a contributing factor in the unfavorable action. A contributing factor is any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision. See Klopfenstein v. PPC Flow Techs. Holdings, Inc., ARB No. 04-149 at 18, ALJ No. 2004-SOX-11 (ARB May 31, 2006) (internal citation omitted). Once a complainant meets her burden by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee’s protected conduct. Clear and convincing evidence is “[e]vidence indicating that the thing to be proved is highly probable or reasonably certain.” See Peck v. Safe Air Int’l, Inc., ARB No. 02-028 at 9, ALJ No. 2001-AIR-3 (ARB Jan. 30, 2004).

			=='''Remedies for Whistleblower Retaliation'''==

			Remedies include:

			*injunctive relief
			*reinstatement
			*back pay with interest
			*“special damages”
			*attorney’s fees
			*litigation costs
			*expert witness fees

			Where reinstatement is unavailable or impractical, front pay may be awarded. “Special damages” has been construed under similar whistleblower protection statutes to include damages for pain, suffering, mental anguish and an injured career or reputation. See, e.g., Kalkunte, ARB Nos. 05-139 & 05-140 at 15 (SOX case awarding complainant emotional distress damages); Hannah v. WCI Communities, 348 F. Supp. 2d 1332, 1334 (S.D. Fla. 2004) (“a successful Sarbanes-Oxley Act plaintiff cannot be made whole without being compensated for damages for reputational injury that diminished plaintiff’s future earning capacity”). A complainant may also be entitled to damages for loss to his reputation as part of the “make whole” remedy provided by the statute. See Hannah, 348 F. Supp. 2d at 1334.

			=='''Procedures Governing Section 402 Whistleblower Retaliation Claims'''==

			A complainant must file her complaint with the Occupational Safety and Health Administration (OSHA) within 180 days after the date on which the retaliatory adverse action occurred. OSHA will investigate the claim and can order preliminary relief, including reinstatement. Either party can appeal OSHA’s determination by requesting a de novo hearing before a DOL Administrative Law Judge (ALJ), but objecting to an order of preliminary relief will not stay the order of reinstatement. Discovery before an ALJ typically proceeds at a faster pace than discovery in state or federal court, and the hearings are less formal than federal court trials. For example, ALJs are not required to apply the Federal Rules of Evidence. Either party can appeal an ALJ’s decision to the ARB and can appeal an ARB decision to the circuit court of appeals in which the adverse action took place.

			If the Secretary of Labor fails to issue a final decision within 210 days of the filing of a complaint, or within 90 days after receiving a written determination from OSHA, the complainant can remove her claim to federal court for de novo review and either party may request a trial by jury. Section 402 does not preempt or diminish any other remedy for retaliation provided by Federal or State law, and therefore a Section 402 complainant could remove the claim to federal court and add additional claims, such as a common law wrongful discharge action, which would provide an opportunity to obtain punitive damages.

			=='''Criminal Antitrust Anti-Retaliation Act'''==

			The [https://www.zuckermanlaw.com/wp-content/uploads/Criminal-Antitrust-Anti-Retalia-tion-Act-of-2019.pdf Criminal Antitrust Anti-Retaliation Act,] which was signed into law on December 23, 2020, protects whistleblowers against retaliation for disclosing evidence of criminal cartel activity.

			=='''Protection Against Retaliation under the Criminal Antitrust Anti-Retaliation Act'''==

			The Criminal Antitrust Anti-Retaliation Act protects any employee, contractor, subcontractor, or agent of an employer.

			The Criminal Antitrust Anti-Retaliation Act does not apply where:

			*the covered individual planned and initiated a violation or attempted violation of the antitrust laws;
			*the covered individual planned and initiated a violation or attempted violation of another criminal law in conjunction with a violation or attempted violation of the antitrust laws; or
			*the covered individual planned and initiated an obstruction or attempted obstruction of an investigation by the Department of Justice of a violation of the antitrust laws.

			=='''Whistleblowing Protected Under the Criminal Antitrust Anti-Retaliation Act'''==

			The Act protects an employee (1) providing information to an employer, a federal regulatory or law enforcement agency, or Congress concerning an act or omission the individual reasonably believes to be a violation of the antitrust laws (section 1 or 3 of the Sherman Act) or a violation of another criminal law committed in conjunction with a potential violation of the antitrust laws; or (2) participating in, or otherwise assisting, an investigation relating to such a violation.

			Criminal prosecutions of Sherman Act violations are typically limited to intentional and clear violations such as price fixing, bid rigging, and market allocation among competitors (also known as “horizontal agreements”). According to the Department of Justice’s Antitrust Resource Manual, price fixing generally involves any agreement between competitors to tamper with prices or price levels, or terms and conditions of sale for commodities or services. Bid rigging generally involves an agreement or arrangement among companies to determine the successful bidder in advance of a bid letting at a price set by the successful bidder. Horizontal customer allocation is an agreement among competitors at the same level of distribution of a product or service that each will service certain designated customers or classes of customers and will not attempt to compete, or will limit the manner in which they will compete, for the business of customers allocated to a competitor.

			Note that some forms of protected conduct under the Criminal Antitrust Anti-Retaliation Act are also protected under other whistleblower protection laws. For example, a disclosure about bid-rigging to obtain a contract with a federal agency can also be protected conduct under the Defense Contractor Whistleblower Protection Act and the False Claims Act.

			=='''Type of Retaliation Prohibited Against Antitrust Whistleblowers'''==

			The Criminal Antitrust Anti-Retaliation Act prohibits a wide range of retaliatory acts, including discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower in the terms and conditions of employment.

			The catch-all category of retaliation (“in any other manner” discriminating against a whistleblower) includes non-tangible employment actions, such as “outing” a whistleblower in a manner that forces the whistleblower to suffer alienation and isolation from work colleagues. See Menendez v. Halliburton, Inc., ARB Nos. 09-002, -003, ALJ No. 2007- SOX- 5 (ARB Sept 13, 2011). An employment action can constitute actionable retaliation if it “would deter a reasonable employee from engaging in protected activity.” Id. at 20.

			=='''Burden of Proof for an Antitrust Whistleblower'''==

			The Criminal Antitrust Anti-Retaliation Act applies the causation standard and burden-shifting framework set forth in the [https://www.law.cornell.edu/uscode/text/49/42121 AIR21 Whistleblower Protection Law]. Under that framework, the whistleblower prevails by proving that their protected whistleblowing was a contributing factor in the unfavorable personnel action taken by their employer. The Department of Labor Administrative Review Board has emphasized that the standard is low and “broad and forgiving”; protected activity need only play some role, and even an “[in]significant” or “[in]substantial” role suffices. Palmer v. Canadian Nat’l R.R., ARB No. 16-035, ALJ No. 2014-FRS-154, at 53 (ARB Sept. 30, 2016) (emphasis in original). Examples of circumstantial evidence that can establish “contributing factor” causation include:

			*temporal proximity;
			*the falsity of an employer’s explanation for the adverse action taken;
			*inconsistent application of an employer’s policies;
			*an employer’s shifting explanations for its actions;
			*animus or antagonism toward the whistleblower’s protected activity; and
			*a change in the employer’s attitude toward the whistleblower after they engage in protected activity.

			Once the whistleblower proves that their protected conduct was a contributing factor in the adverse action, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same adverse action in the absence of the whistleblower engaging in protected conduct.

			=='''Remedies or Damages in an Antitrust Whistleblower Retaliation Case'''==

			A prevailing antitrust whistleblower is entitled to make-whole relief, which includes:

			*reinstatement with the same seniority status that the whistleblower would have had, but for the discrimination;
			*back pay, with interest; and
			*compensation for any special damages sustained as a result of the discrimination including litigation costs, expert witness fees, and reasonable attorneys’ fees.

			=='''Deadline or Statute of Limitations to File an Antitrust Whistleblower Retaliation Case'''==

			The statute of limitations for an antitrust whistleblower retaliation claim is 180 days from the date that the employee was first informed of the adverse action.

			=='''Antitrust Whistleblower Retaliation Case Adjudication'''==

			An antitrust whistleblower retaliation case must be filed initially with OSHA, which will investigate the claim. If OSHA determines that there is [https://www.zuckermanlaw.com/sp_faq/reasonable-cause-standard-osha-whistleblower-investigation/ reasonable cause] to believe that a violation occurred, OSHA can order relief, including reinstatement of the whistleblower.

			Either party can appeal OSHA’s determination by requesting a de novo hearing before the DOL Office of Administrative Law Judges (OALJ), but an employer’s objection to an order of preliminary relief will not stay the order of reinstatement. Once an antitrust retaliation claim has been pending before the DOL for more than 180 days, the whistleblower can remove the claim to federal court.

			=='''Purpose of the Criminal Antitrust Anti-Retaliation Act'''==

			Senators Grassley and Leahy, the sponsors of the Criminal Antitrust Anti-Retaliation Act, offered the following explanation of the purpose of the Act:

			“Competition is essential for a thriving, affordable and innovative marketplace. When our antitrust laws are violated, consumers are often left paying the price. The Criminal Antitrust Anti-Retaliation Act encourages and shields from reprisal private sector employees to shine a light on activities that violate our antitrust laws. This bipartisan bill is an important step to safeguarding fair marketplaces as well as the whistleblowers who support them. It’s earned broad support in both chambers of Congress, and I urge President Trump to sign it into law without delay,” Grassley said

			“Our country has a proud history of protecting whistleblowers who expose wrongdoing . . . In an era where dominant corporations aggressively seek to expand their profits and quash competitors, our laws should protect whistleblowers who take significant risks to report criminal antitrust violations like price-fixing that undermine free and fair competition . . . ,” Leahy said.

			The Criminal Antitrust Anti-Retaliation Act implements a recommendation made in a July 2011 [https://www.gao.gov/assets/gao-11-619.pdf GAO Report about criminal cartel enforcement.]

Admin: /* Scope of Protected Whistleblowing About Consumer Financial Protection Violations */

2025-02-17T18:13:30Z

Scope of Protected Whistleblowing About Consumer Financial Protection Violations

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Admin: /* Remedies Available to Prevailing Trucking Industry Whistleblowers */

2025-02-14T22:11:33Z

Remedies Available to Prevailing Trucking Industry Whistleblowers

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	In Fink v. R&L Transfer, Inc., the ARB affirmed an award of compensatory damages in the amount of $100,000.00, and punitive damages in the amount of $50,000 to a truck driver who was terminated for refusing to drive in unsafe winter weather conditions.		In Fink v. R&L Transfer, Inc., the ARB affirmed an award of compensatory damages in the amount of $100,000.00, and punitive damages in the amount of $50,000 to a truck driver who was terminated for refusing to drive in unsafe winter weather conditions.

			=='''How to File a Trucking Safety Whistleblower Retaliation Action'''==

			A STAA whistleblowing complaint must be filed initially with the Occupational Safety and Health Administration (OSHA) within 180 days of when the whistleblower knew or should have known of the retaliatory action.

			=='''Consumer Financial Protection Act'''==

			The anti-retaliation provision of the Consumer Financial Protection Act provides a cause of action for corporate whistleblowers who suffer retaliation for raising concerns about potential violations of rules or regulations of the Consumer Financial Protection Bureau.

			OSHA has issued final rules implementing the whistleblower protection provision of the Consumer Financial Protection Act (CFPA). Enacted as Section 1057 of the Dodd-Frank Act, the CFPA’s whistleblower protection provision provides robust protection to employees who disclose fraud related to consumer financial protection services.

			The whistleblower protection provisions of the Sarbanes-Oxley Act also provides strong protection for whistleblowers. Click here to download a helpful guide to the Sarbanes-Oxley whistleblower protection law.

			=='''Banking Industry Employees Protected by the Consumer Financial Protection Whistleblower Law'''==

			The term “covered employee” means “any individual performing tasks related to the offering or provision of a consumer financial product or service.” The CFPA defines a “consumer financial product or service” to include “a wide variety of financial products or services offered or provided for use by consumers primarily for personal, family, or household purposes, and certain financial products or services that are delivered, offered, or provided in connection with a consumer financial product or service . . . Examples of these include . .. residential mortgage origination, lending, brokerage and servicing, and related products and services such as mortgage loan modification and foreclosure relief; student loans; payday loans; and other financial services such as debt collection, credit reporting, credit cards and related activities, money transmitting, check cashing and related activities, prepaid cards, and debt relief services.”

			Recently the Fifth Circuit Court of Appeals held in Calderone v. Sonic Houston JLR, L.P that the CFPA does not protect employees of auto dealers.

			=='''Scope of Protected Whistleblowing About Consumer Financial Protection Violations'''==

			The CFPA protects disclosures made to an employer, to the Consumer Financial Protection Bureau or any State, local, or Federal, government authority or law enforcement agency concerning any act or omission that the employee reasonably believes to be a violation of any CFPB regulation or any other consumer financial protection law that the Bureau enforces. This includes several federal laws regulating “unfair, deceptive, or abusive practices . . . related to the provision of consumer financial products or services.”

			Some of the matters the CFPB regulates include:

			*kickbacks paid to mortgage issuers or insurers;
			*deceptive advertising;
			*discriminatory lending practices, including a violation of the Equal Credit Opportunity Act (“ECOA”);
			*excessive fees;
			*any false, deceptive, or misleading representation or means in connection with the collection of any debt; and
			*debt collection activities that violate the Fair Debt Collection Practices Act (FDCPA).

			The ECOA prohibits creditors from discriminating against “any applicant, with respect to any aspect of a credit transaction—on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract).” 15 U.S.C. § 1691(a)(1).

			CFPA protected conduct includes disclosures concerning:

			*'''Loan fraud'''' – Where the plaintiff banker reported a fellow banker for preparing a loan for disbursement without providing the borrower three days to rescind their decision to borrow as required by state and federal consumer protection statutes, the District Court for the Southern District of West Virginia held this could be protected activity. Vaghela v. Huntington Bancshares, Inc., 2018 WL 2014087 (S.D. W.Va. Apr. 30, 2018).
			*'''Mortgage overbilling''' – Where the plaintiff mortgage attorney reported what he believed to be a widespread practice of significant overbilling of mortgage loans by a mortgage foreclosure firm, the District Court for the District of Maryland held that this could be protected. Yoder v. O’Neil Group, LLC, 2017 WL 6206074 (D. Md. Dec. 8, 2017).
			*'''Banking fraud''' – Where former bank employees alleged termination for reporting fraudulent sales practices that they alleged were violations of the Truth in Lending Act, the Home Ownership Equity Protection Act, and the Real Estate and Settlement Procedures Act, the District Court for the Northern District of Illinois held reporting violations of any of these statutes would be protected activity and retaliatory termination for objecting to these violations would violate the CFPA. Lysik v. Citibank, N.A., 2017 WL 4164037 (N.D. Ill. Sep. 20, 2017).
			*'''Lapses in bank management and judgment''' – Where a bank’s treasurer and chief financial officer uncovered and reported serious mismanagement of a bank and its funds, including the bank’s president using the business credit card for personal expenses and engaging in pattern of unusual check cashing by cashing checks by placing holds on employee accounts, the District Court for the District of Massachusetts held this could constitute protected activity. Becotte v. Cooperative Bank, 2017 WL 886967 (D. Mass. Mar. 6, 2017).

			While the CFPB’s whistleblower protections are relatively broad, simply asking questions about alleged violations of banking laws will generally not constitute protected conduct. The Sixth Circuit Court of Appeals has held that where a mortgage loan originator had a conversation with his employer bank’s mortgage compliance department about the obligation to mail out adverse action notices informing mortgage loan applicants that they had been denied loans and liability for failure to do so, he did not engage in protected activity. The court held the plaintiff-employee did not engage in protected activity because he did not object to the unlawful practice and instead only asked questions confirming and clarification what he should do in the future. The court, in its decision, implied that if the mortgage loan originator had instead objected to unlawful activity rather than only asking questions, his activity would have been protected under the CFPA, and his employer may have violated the statute by terminating his employment. See Veard v. F&M Bank, 704 Fed. Appx. 469 (6th Cir. 2017).

Admin: /* Awards for Reporting Tax Fraud to the IRS */

2025-02-14T21:53:18Z

Awards for Reporting Tax Fraud to the IRS

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Admin: /* Remedies in a Tax Fraud Whistleblower Retaliation Case */

2025-02-14T20:55:05Z

Remedies in a Tax Fraud Whistleblower Retaliation Case

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	These remedies are substantially similar to the relief authorized in the anti-retaliation provision of the False Claims Act. Neither statute authorizes an award of punitive damages, but double back pay and uncapped special damages can be a potent remedy.		These remedies are substantially similar to the relief authorized in the anti-retaliation provision of the False Claims Act. Neither statute authorizes an award of punitive damages, but double back pay and uncapped special damages can be a potent remedy.

			=='''Deadline or Statute of Limitations to File a TFA Whistleblower Retaliation Case'''==

			The statute of limitations for a TFA whistleblower retaliation claim is 180 days from the date that the employee is first informed of the adverse action.

			=='''Tax Fraud Whistleblower Retaliation Case Adjudication'''==

			The claim must be filed initially with OSHA, which will investigate the claim. If OSHA determines that there is reasonable cause to believe that a violation occurred, OSHA can order relief, including reinstatement of the whistleblower.

			Either party can appeal OSHA’s determination by requesting a de novo hearing before the DOL Office of Administrative Law Judge (OALJ), but an employer’s objection to an order of preliminary relief will not stay the order of reinstatement. Once a TFA retaliation claim has been pending before the DOL for more than 180 days, the whistleblower can remove the claim to federal court and try the case before a jury.

			=='''Employer Mandatory Arbitration of Employment Disputes'''==

			TFA retaliation claims are exempt from mandatory arbitration.

			=='''Awards for Reporting Tax Fraud to the IRS'''==

			Under 26 USC § 7623(b), the IRS is required to issue an award to tax whistleblowers of 15% to 30% of proceeds collected from tax fraud or tax underpayments if:

			*the whistleblower provides a tip that the IRS decides to take action on (a whistleblower cannot force the IRS to act on a tip);
			*the amount in dispute (the tax underpayment, including interest and penalties) exceeds $2 million (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
			*the IRS collects tax underpayments resulting from the action (including any related actions).

			During fiscal year 2018, the IRS awarded $312M to tax fraud whistleblowers, and whistleblowers enabled the IRS to recover $1,441,255,859.

Admin: /* Differences between SOX and Dodd-Frank Acts */

2025-02-14T20:44:12Z

Differences between SOX and Dodd-Frank Acts

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Admin: /* Dodd-Frank Act */

2025-02-14T19:41:28Z

Dodd-Frank Act

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	Post Somers, the SEC has indicated that it will continue to prioritize whistleblower protection as a key tool to encourage whistleblowers to come forward. In a June 28, 2018 public statement at the open meeting announcing the Proposed Rulemaking, Chair Clayton stated: “Many have asked whether the SEC will continue to enforce the anti-retaliation provisions of Dodd-Frank. Let me be clear: retaliation protections are a key component of the whistleblower program, and we will bring charges against companies or individuals who violate the anti-retaliation protections when appropriate.” Statement at Open Meeting on Amendments to the Commission’s Whistleblower Program Rules.		Post Somers, the SEC has indicated that it will continue to prioritize whistleblower protection as a key tool to encourage whistleblowers to come forward. In a June 28, 2018 public statement at the open meeting announcing the Proposed Rulemaking, Chair Clayton stated: “Many have asked whether the SEC will continue to enforce the anti-retaliation provisions of Dodd-Frank. Let me be clear: retaliation protections are a key component of the whistleblower program, and we will bring charges against companies or individuals who violate the anti-retaliation protections when appropriate.” Statement at Open Meeting on Amendments to the Commission’s Whistleblower Program Rules.

			==='''SEC Enforcement of Dodd-Frank SEC Whistleblower Retaliation Provision'''===

			The SEC has taken enforcement action for retaliation against a whistleblower.

			*On September 29, 2016, the SEC ordered International Game Technology (“IGT”) to pay a $500,000 penalty for terminating the employment of a whistleblower because he reported to senior management and to the SEC that the company’s financial statements might be distorted. See Exchange Act Release No. 78991 (Sept. 29, 2016). During an internal investigation into the whistleblower’s allegations, IGT removed him from opportunities that were integral to his ability to perform his job successfully. IGT then fired the whistleblower the same day as the internal investigation concluded that IGT’s cost-accounting model was appropriate and did not cause its financial statements to be distorted. The whistleblower was protected under the SEC whistleblower program, despite being mistaken, because he reasonably believed that IGT’s cost-accounting model constituted a violation of federal securities laws.

			The action against IGT was the SEC’s first standalone retaliation case. However, it is consistent with a 2014 enforcement action that indicated, for the first time, that retaliating against a whistleblower can result not only in a private suit brought by the whistleblower but also in a unilateral SEC enforcement action.

			*On June 16, 2014, the SEC announced that it was taking enforcement action against Paradigm Capital Management, Inc. (“Paradigm”), a hedge fund advisory firm, for engaging in prohibited principal transactions and for retaliating against the whistleblower who disclosed the unlawful trading activity to the SEC. See Exchange Act Release No. 72393 (June 16, 2014). This was the first case in which the SEC exercised its authority under Dodd-Frank to bring enforcement actions based on retaliation against whistleblowers.
			*According to the order, Paradigm retaliated against its head trader for disclosing, internally and to the SEC, prohibited principal transactions with an affiliated broker-dealer while trading on behalf of a hedge fund client. The transactions were a tax-avoidance strategy under which realized losses were used to offset the hedge fund’s realized gains.
			*When Paradigm learned that the head trader had disclosed the unlawful principal transactions to the SEC, it retaliated against him by removing him from his position as head trader, changing his job duties, placing him on administrative leave, and permitting him to return from administrative leave only in a compliance capacity, not as head trader. The whistleblower ultimately resigned his position.
			*Paradigm settled the SEC charges by consenting to the entry of an order finding that it violated the anti-retaliation provision of Dodd-Frank and committed other securities law violations; agreeing to pay more than $1 million to shareholders and to hire a compliance consultant to overhaul their internal procedures; and entering into a cease-and-desist order.

			The SEC’s press release accompanying the order includes the following statement by Enforcement Director Andrew Ceresney: “Those who might consider punishing whistleblowers should realize that such retaliation, in any form, is unacceptable.” '''The Paradigm enforcement action suggests that whistleblower retaliation can result in liability far beyond the damages that a whistleblower can obtain in a retaliation action and that retaliation can invite or heighten SEC scrutiny.'''

			=='''Differences between SOX and Dodd-Frank Acts '''==

			This table identifies some of the major differences between the anti-retaliation provisions of SOX and Dodd-Frank. To maximize the potential recovery, a whistleblower could initially bring a SOX claim at OSHA and subsequently remove it to federal court and also bring a Dodd-Frank claim. Doing so could enable the whistleblower to recover double back pay and uncapped special damages.

			{\| class="wikitable"
			\|-
			! Topic Area !! SOX !! Dodd-Frank
			\|-
			\| Scope of Coverage \|\| Any company with a class of securities registered under section 12 of the Securities Exchange Act of 1934, or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934, including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company, or nationally recognized statistical rating organization, or any officer, employee, contractor, subcontractor, or agent of such company. \|\| Any employer
			\|-
			\| Protection for internal whistleblowing \|\| Yes \|\| Internal whistleblowing protected only if individual has also reported a possible securities violation to the SEC
			\|-
			\| Protection for whistleblowing to SEC \|\| Yes \|\| Yes
			\|-
			\| Statute of Limitations \|\| 180 days \|\| 6 years
			\|-
			\| Administrative Exhaustion \|\| Must file initially with OSHA \|\| None
			\|-
			\| Arbitration \|\| Exempt from mandatory arbitration \|\| Not exempt
			\|-
			\| Back pay \|\| Ordinary back pay \|\| Double back pay
			\|-
			\| Special damages for emotional distress and reputational harm \|\| Available \|\| Not available
			\|}

Admin: /* Back Pay in Whistleblower Retaliation Cases */

2025-02-14T19:01:23Z

Back Pay in Whistleblower Retaliation Cases

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	===='''Back Pay in Whistleblower Retaliation Cases'''====		===='''Back Pay in Whistleblower Retaliation Cases'''====

			Back pay is compensation for lost wages and benefits that the whistleblower would have earned absent the adverse employment action, offset by interim earnings. A back pay award may include all promotions and salary increases the complainant would have received in the absence of retaliation. See, e.g., Welch v. Cardinal Bankshares Corp., 2003-SOX-15, at 17 (ALJ Feb. 15, 2005) (holding that a prevailing complainant “is entitled to all promotions and salary increases that he would have obtained but for the illegal discharge”) rev’d on other grounds, 536 F.3d 269 (4th Cir. 2008). The value of stock options is recoverable in SOX whistleblower cases. Hagman v. Washington Mutual Bank, Inc., 2005-SOX-73, 2006 WL 6105301, *32 (Dec. 19, 2006).

			In addition to back pay, a prevailing whistleblower is entitled to prejudgment interest under certain whistleblower protection laws. Prejudgment interest accrues from the time of the whistleblower’s termination to the time that the court entered judgment.

			Under the False Claims Act whistleblower protection law and Dodd-Frank anti-retaliation provision, a prevailing whistleblower is entitled to recover double back pay. In Mooney v. Americare, the court held that back pay is doubled before the court offsets the value of interim earnings (also known as mitigation).

			Back pay can also include contracted severance pay to which he would be entitled in the event of discharge without cause when reinstatement was not appropriate. See Loftus v. Horizon Lines, Inc., ARB No. 16-082, ALJ No. 2014-SPA-004 (ARB May 24, 2018).

			===='''Front Pay in Lieu of Reinstatement in Whistleblower Retaliation Cases'''====

			Reinstatement is the “presumptive and preferred remedy,” but where pronounced animosity between the parties leads both of them to advocate against reinstatement, front pay may be an appropriate substitute. Front pay is designed to compensate the plaintiff for the time it would take to secure comparable employment. See, e.g., Hagman v. Washington Mutual Bank, Inc., ALJ Case No. 2005-SOX-00073, at 26–30 (ARB Dec. 19, 2006), appeal dismissed, ARB Case No. 07-039 (ARB May 23, 2007) (awarding $640,000 in front pay to a banker whose supervisor became verbally and physically threatening when the banker disclosed concerns about the short funding of construction loans).

			Where a whistleblower demonstrates that he planned to continue working for the employer until he or she reached normal retirement age and demonstrates sufficient efforts to mitigate damages (find comparable employment), the whistleblower can been entitled to expected earnings to the date of retirement. For example in the Perez v. Progenics Pharmaceuticals SOX whistleblower case, the court awarded approximately $2.7 in front pay. That case is discussed in an article in Corporate Counsel titled How to Help a Whistleblower.

			Front pay is an appropriate remedy in lieu of reinstatement in SOX whistleblower cases. See Jones v. SouthPeak Interactive Corp., 986 F. Supp. 2d 680 (E.D. Va. 2013), aff’d, 777 F.3d 658 (4th Cir. 2015). Andrea Jones worked at SouthPeak Interactive Corp. (“SouthPeak”) as its chief financial officer, and SouthPeak terminated her employment two days after she disclosed accounting irregularities to the SEC. Following a four-day trial, a jury found for Jones and awarded nearly $700,000 in damages. Jones then filed a motion seeking front pay in lieu of reinstatement and in addition to compensatory damages. Judge Payne awarded front pay, and noted the following:

			Front pay also has been more precisely defined as “a lump sum … representing the discounted present value of the difference between the earnings [an employee] would have received in his old employment and the earnings he can be expected to receive in his present and future, and by hypothesis, inferior, employment.” McKnight v. Gen. Motors Corp., 908 F.2d 104, 116 (7th Cir.1990), cert. denied, 499 U.S. 919, 111 S.Ct. 1306, 113 L.Ed.2d 241 (1991), partially superseded by Civil Rights Act of 1991, Pub.L. 102-166, 105 Stat. 1071 (codified at 42 U.S.C. 1981 et seq.). If a plaintiff has been diverted onto a less profitable career path through the unlawful actions of his former employer, an award of front pay to compensate the plaintiff until such time as he can regain his former career track is not a windfall.

			SouthPeak appealed Judge Payne’s decision. The DOL filed an amicus curiae brief arguing that front pay is an appropriate remedy under SOX, and the Fourth Circuit affirmed. See 777 F.3d at 663.

			In calculating front pay, courts should apply the following guiding principles:

			*“It is well settled that `the risk of lack of certainty with respect to projections of lost income must be borne by the wrongdoer, not the victim.” Bartek v. Urban Redevelop ent Authority, 882 F.2d 739, 746 (3d Cir. 1989).
			*The Court should “assume, absent evidence to the contrary, that the illegally discharged employee would have continued working for the employer until he or she reached normal retirement age.” See Perez v. Progenics Pharmaceuticals, Inc., 204 F. Supp. 3d 528 (S.D.N.Y. 2016).

			===='''Compensatory Damages in Whistleblower Retaliation Cases'''====

			The SOX whistleblower protection law and similar corporate whistleblower protection laws authorize the award of not only economic damages, but also “special damages” which includes damages for emotional distress, mental anguish, humiliation and injury to reputation. See, e.g., Lockheed Martin Corp. v. Admin. Rev. Bd., 717 F.3d 1121, 1138 (10th Cir. 2013) (upholding an award of “noneconomic compensatory damages” for “emotional pain and suffering, mental anguish, and humiliation”). As a federal judge held in Hanna v. WCI Communities, Inc., 348 F.Supp.2d 1332 (S.D.Fla.2004), a SOX whistleblower case, “[w]hen reputational injury caused by an employer’s unlawful discrimination diminishes a plaintiff’s future earnings capacity, [he] cannot be made whole without compensation for the lost future earnings [he] would have received absent the employer’s unlawful activity.”

			“[A] plaintiff’s testimony, standing alone, can support an award of compensatory damages, [but] the evidence of the emotional distress must be demonstrable, genuine, and adequately explained.” Price v. City of Charlotte, N.C., 93 F.3d 1241, 1251-52 (4th Cir. 1996). The whistleblower’s testimony “must indicate with specificity how the plaintiff’s alleged distress manifested itself.” Bryant v. Aiken Reg’l Med. Ctrs., 333 F.3d 536, 547 (4th Cir. 2003) (internal quotation marks and alterations omitted).

			===='''Attorney Fees and Litigation Costs in Whistleblower Retaliation Cases'''====

			Legal fees and costs in whistleblower retaliation cases can also be significant. In the Wadler v. Bio Rad SOX whistleblower retaliation case, Bio-Rad stipulated to $3M in attorney fees for the whistleblower’s counsel. In March 2020, Magistrate Judge Michael E. Hegarty awarded $2,719,225.50 in lodestar fees on the whistleblower’s recovery of $620,105.00 in an NDAA whistleblower retaliation case. See Cejka v. Vectrus Systems Corp., 2019 WL 8198090 (D. Colo. Feb. 21, 2019).

			==='''Litigating Sarbanes-Oxley Whistleblower Cases'''===

			A Sarbanes-Oxley whistleblower retaliation complaint must be filed initially with OSHA. The complainant has the option to remove a SOX whistleblower claim to federal court once the complaint has been pending at the Department of Labor for 180 days.

			===='''180-Day Sarbanes-Oxley Statute of Limitations'''====

			The deadline for a SOX whistleblower to file a complaint is 180 days after the whistleblower first experiences or becomes aware of the unlawful retaliation.i The clock starts ticking once “the discriminatory decision has been both made and communicated to the complainant.”ii

			The 180-day clock starts to run on the date of each discrete retaliatory act, e.g., the date on which the whistleblower is informed of a demotion, suspension, termination, change in job duties, etc. However, in an action alleging a hostile work environment, retaliatory acts outside the statute of limitations period are actionable where there is an ongoing hostile work environment and at least one of the acts occurred within the 180-day statute of limitations.

			A SOX retaliation complaint is considered filed once the Department of Labor receives it. A complaint sent by mail, however, is considered filed on the date of its postmark.

			The 180 day period is not jurisdictional and may be equitably tolled when (1) the respondent actively misled the complainant respecting the cause of action, (2) extraordinary circumstances prevented the complainant from asserting his rights, (3) complainant raised the precise statutory claim in issue but mistakenly did so in the wrong forum, or (4) the respondent did not actively mislead the complainant, but instead through its acts or omissions lulled the complainant into foregoing prompt action to vindicate his rights.

			“[A]lthough recovery for any action outside the 180-day period is barred, an employee may still use ‘the prior acts as background evidence in support of a timely claim.’” Roop v. Kan. City S. Ry., No. CIV-16-413-SPS, 2017 U.S. Dist. LEXIS 177646 (E.D. Okla. Oct. 26, 2017) citing Dunn v. BNSF Ry. Co., 2017 U.S. Dist. LEXIS 137109, 2017 WL 3670559, at *8 (W.D. Wash. Aug. 25, 2017), quoting Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 105, 110, 113 (2002).

			===='''Individual Liability Under SOX Whistleblower Protection Law'''====

			A whistleblower can bring a SOX retaliation claim against individuals who have the functional ability to retaliate against the whistleblower, and are aware of the whistleblower’s protected conduct (or influenced by a person with knowledge of the protected conduct).

			The Fourth Circuit and a California district court have held that directors may be held individually liable under SOX as agents of a publicly-traded company. See Jones v. Southpeak Interactive Corp. of Delaware, 777 F.3d 658, 675 (4th Cir.2015); Wadler v. Bio-Rad Labs, Inc., No. 15-cv-02356-JCS, 2015 WL 6438670 (N.D. Cal. Oct. 23, 2015). But in Zornoa v. Terraform Global, Inc. of the United States Court for the Southern District of New York held that corporate directors are not liable under SOX because they are not understood to function as agents and the statute omits directors from its list of potentially liable persons.

			===='''OSHA Enforcement of Sarbanes-Oxley Whistleblower Law'''====

			The U.S. Department of Labor Occupational Safety and Health Administration (“OSHA”) administers the anti-retaliation provision of SOX. A SOX whistleblower claim must be filed initially with OSHA. OSHA will then investigate the complaint and may order preliminary reinstatement of the whistleblowers if it finds “reasonable cause” to believe that retaliation occurred.

			OSHA finds “reasonable cause” when it determines that a reasonable judge could rule for the whistleblower. And a reasonable judge could rule so only where there is evidence supporting each element of a SOX retaliation claim. Generally, though, less evidence is required to establish “reasonable cause” at this stage than to prevail at trial. “OSHA’s responsibility to determine whether there is reasonable cause to believe a violation occurred is greater than the complainant’s initial burden to demonstrate a prima facie allegation that is enough to trigger the investigation.”[i] But OSHA need not “resolve all possible conflicts in the evidence or make conclusive credibility determinations to find reasonable cause to believe that a violation occurred.” In practice, however, OSHA rules for SOX complainants only in the strongest cases, which is due in part to the burden that OSHA must bear to order preliminary reinstatement of a whistleblower.

			[i] [https://www.whistleblowers.gov/memo/2015-04-20 Clarification of the Investigative Standard for OSHA Whistleblower Investigations (Apr. 20, 2015)]

			=='''Dodd-Frank Act'''==

			The whistleblower protection provision of the Dodd-Frank Act prohibits retaliation against a whistleblower for lawful actions taken by a whistleblower:

			#in providing information to the Commission in accordance with this section;
			#in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or
			#in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. [§§] 7201 et seq.), this chapter, including section 78j-1(m) of this title, section 1513(e) of Title 18, and any other law, rule, or regulation subject to the jurisdiction of the Commission.

			15 U.S.C. § 78u-6(h)(1)(A). A prevailing whistleblower can secure reinstatement and recover double back pay and compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.

			In February 2018, the Supreme Court held in Somers that the anti-retaliation provision of the Dodd-Frank Act projects a whistleblower only where the whistleblower has disclosed a potential securities law violation to the SEC. Somers also clarified that once an employee has provided information to the SEC, subsequent internal disclosures are protected absent proof that the employer had knowledge of the disclosure to the SEC.

			Post Somers, the SEC has indicated that it will continue to prioritize whistleblower protection as a key tool to encourage whistleblowers to come forward. In a June 28, 2018 public statement at the open meeting announcing the Proposed Rulemaking, Chair Clayton stated: “Many have asked whether the SEC will continue to enforce the anti-retaliation provisions of Dodd-Frank. Let me be clear: retaliation protections are a key component of the whistleblower program, and we will bring charges against companies or individuals who violate the anti-retaliation protections when appropriate.” Statement at Open Meeting on Amendments to the Commission’s Whistleblower Program Rules.

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https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/whistleblower-verdicts-and-settlements/

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	Click [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/whistleblower-verdicts-and-settlements/ here] for examples of substantial verdicts and settlements in whistleblower retaliation cases. Recently, the Pennsylvania Supreme Court affirmed an award of approximately $3.2 million in a whistleblower protection case.		Click [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/whistleblower-verdicts-and-settlements/ here] for examples of substantial verdicts and settlements in whistleblower retaliation cases. Recently, the Pennsylvania Supreme Court affirmed an award of approximately $3.2 million in a whistleblower protection case.

	===='''~~https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/whistleblower-verdicts-and-settlements/~~'''====		===='''Back Pay in Whistleblower Retaliation Cases'''====

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Recent SOX Whistleblower Recoveries

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	*[https://www.zuckermanlaw.com/jp-morgan-sox-whistleblower-wins-1-13m-trial/ JP Morgan SOX Whistleblower Wins $1.13M at Trial]		*[https://www.zuckermanlaw.com/jp-morgan-sox-whistleblower-wins-1-13m-trial/ JP Morgan SOX Whistleblower Wins $1.13M at Trial]
	*[https://www.zuckermanlaw.com/ubs-whistleblower-prevails-trial-sox-whistleblower-case/ UBS Whistleblower Prevails at Trial] in SOX Whistleblower Case		*[https://www.zuckermanlaw.com/ubs-whistleblower-prevails-trial-sox-whistleblower-case/ UBS Whistleblower Prevails at Trial] in SOX Whistleblower Case

			==='''Remedies in Whistleblower Retaliation Cases'''===

			Whistleblower retaliation can exact a serious toll, including lost pay and benefits, reputational harm, and emotional distress. Indeed, whistleblower retaliation can derail a career and deprive the whistleblower of millions of dollars in lost future earnings.

			Whistleblowers should be rewarded for doing the right thing, but all too often they suffer retaliation and find themselves marginalized and ostracized. Federal and state whistleblower laws provide several remedies to compensate whistleblowers that have suffered retaliation, including:

			*back pay (lost wages and benefits);
			*emotional distress damages;
			*damages for reputational harm;
			*reinstatement or front pay in lieu thereof;
			*lost future earnings; and
			*punitive damages.

			Click [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/whistleblower-verdicts-and-settlements/ here] for examples of substantial verdicts and settlements in whistleblower retaliation cases. Recently, the Pennsylvania Supreme Court affirmed an award of approximately $3.2 million in a whistleblower protection case.

			===='''https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/whistleblower-verdicts-and-settlements/'''====