Whistleblower and Retaliation Claims: Legal Risks and Strategic Solutions for Employers

1. Whistleblower and Retaliation Claims: Legal Risks and Strategic Solutions for Employers Todd A. Leeson, Esq. Gentry Locke leeson@gentrylocke.com www.gentrylocke.com/leeson Twitter: @ToddLeeson1

2. What is Retaliation?

3. Retaliation Charges with the EEOC • For 4 years in a row, “retaliation” is largest category of EEOC charges • In FY 2013, persons filed almost 39,000 retaliation charges (which is 41% of all charges filed). • EEOC has 6 strategic enforcement priorities: Priority 5 is “Preserving Access to the Legal System”—includes retaliation • Questions for HR: Why explosion of “retaliation” claims? • What should HR do as result of this knowledge?

4. 3 Essential Elements of EEOC Retaliation • Employee engaged in “protected activity” • Employee suffered an “adverse action” • Causal connection between protected activity and adverse action

5. Protected Activity: “Internal Opposition” • Did the employee communicate to management, in good faith, that conduct occurred that the employee reasonably believed was unlawful under applicable employment law (e.g., Title VII, ADA, ADEA, EPA)? • In other words, unlawful for Employer to take adverse action against person because she “opposed” any practice or conduct that she reasonably believed would be unlawful under the employment discrimination laws.

6. Complaint to HR: Valid Claim? Emily complained to Hilary in HR that she is tired of being “picked on and harassed” by Supervisor Sam. She stated that Sam is “mean, rude, and overly demanding” to her and her co-workers, and that she has “had enough of his bullying tactics.” Hilary thanks Emily and tells her she will monitor the situation. Three days later, Sam demanded that Emily be fired for her poor performance. Hilary complied and terminated Emily. Does Emily have a viable retaliation claim?

7. Answer: Probably Not! • What law has Emily implicated with her “complaint” to HR? • What if Emily’s “complaint” included that she was tired of Sam “picking on all the women” in the office? • Best practice: Hilary should have asked Emily for specific details to support her conclusory allegations. • (e.g., What did Sam do? What did Sam say? What date(s)? Any witnesses? Any e-mails/texts?)

8. Practice Point: Internal Communications • In event of litigation, be aware that almost all of your internal emails & communications as to investigation will be discoverable • Limit internal emails; face-to-face conversations or phone calls are preferred • Also, when you memorialize any action or finding, be careful about labels (e.g., she filed a “retaliation” complaint)---better to focus upon facts, not conclusions.

9. Protected Activity: Participation • Also unlawful to discriminate/retaliate against person who “participated” in an investigation, proceeding, hearing or litigation under any of the laws enforced by the EEOC. • Includes conduct such as providing information to management during internal investigation; filing a charge of discrimination with EEOC; assisting a person who has filed charge with EEOC; or testifying in a proceeding.

10. U.S. Supreme Court Has Recently Decided Several Retaliation Cases • As general proposition, US Supreme Court has held in several recent cases that various “retaliation” laws should be broadly interpreted in favor of coverage. • Nassar (2013), was a rare employer victory. In 5-4 decision, Court held a plaintiff alleging unlawful retaliation under Title VII must prove retaliation was the “but for” cause of the adverse employment action. • This is higher standard of proof: Employee must prove that the protected activity was THE REASON that the employer took the adverse action. [Title VII & ADEA cases]

11. What/Who is a Whistleblower?

12. OSHA is Federal Agency that Enforces 22 Separate Whistleblower Laws File complaint with OSHA if employer takes adverse action because employee engaged in “protected activity” relating to specific laws on topics including: • Workplace safety or health • Transportation (air, motor carrier, motor vehicle) • Consumer product, Food safety • Financial reform, Securities laws • Environmental and Nuclear safety • Health insurance reform (ACA)

13. OSHA Whistleblower Cases on the Rise • FY 2006 1842 cases • FY 2009 2160 cases • FY 2013 2920 cases • March 2014—OSHA seeks significant increase in funding for its whistleblower program. Over 2 year period in 2014 & 2015, OSHA seeks to expand from 115 to 158 employees.

14. Recent or More Prevalent Laws • Surface Transportation Assistance Act (STAA)—truck drivers, commercial motor vehicles • “AIR21”—concerns relating to air safety, air carriers • Sarbanes-Oxley (SOX)—employees (and now contractors) of public employers who report alleged mail, wire, bank or securities fraud. • “MAP21”—2012 law that protects employees who report violations of motor vehicle safety standards • Food Safety Modernization Act (FSMA)---employees who report violations of food safety regulations

15. Overview of OSHA Process • Person files retaliation complaint with OSHA • If complaint meets min. standards, OSHA sends notice to Employer and requests response • OSHA completes initial investigation—dismissal or preliminary finding of “reasonable cause” which can lead to interim reinstatement. • Either party may seek Hearing with Admin. Law Judge (ALJ) • Aggrieved party may appeal to Admin. Review Board (ARB) • ARB final decision can be appealed to Court

16. OSHA Complaints May Be Filed On-Line • December 2013 – OSHA announced that persons may log onto its website and file complaints electronically. • 5 page form – employees can file formal complaint from home computer or tablet!

17. Elements of OSHA Whistleblower Claim • Each of 22 laws has own legal standards, remedies. • Generally, however, employee must engage in “protected activity” (similar to EEOC analysis). • Ambiguous, general internal complaint should not be sufficient. • What law or provisions of law, if any, does employee invoke? • This is critical for HR to understand.

18. OSHA Guidance to Employers is Sparse • Explore whistleblowers.gov – Is your company in industry implicated by one of these 22 laws? • Ex: manufacturer or supplier of motor vehicle parts. • MAP-21, new law enacted in 2012 • OSHA fact sheet on MAP-21, but no other guidance. • Some laws – specific regulations, guidance; other laws – still too new

19. U.S. Supreme Court Decided SOX Whistleblower Case • Lawson v. FMR (Mar. 4, 2013) – SOX’s Whistleblower protection extends to employees of publicly traded company’s contractors and subcontractors. • FMR was private management company under contract to provide investment advising services to Fidelity family of mutual funds (publicly traded company). FMR employees raised concerns about accounting inaccuracies in federal filings. • Supreme Court – SOX protection extends to employees of such private contractors.

20. Whistleblower Trial in Richmond Results in $950,000 Verdict for Plaintiff • 1st SOX trial in Virginia – July 2013 • Jones v. South Peak, Phillips and Mroz. Jones was CFO who discovered alleged fraudulent financial reporting. • Company contention – simple accounting mistake. • Company fired Jones when she refused to sign an amended financial report without her proposed additional explanation as to prior transaction at issue. • $950,000 verdict for Jones (including personal liability)

21. Other Federal & Virginia Employment Laws Proscribe Retaliation. • Focus thus far has been on retaliation/whistleblower laws enforced by EEOC or OSHA • Other Federal employment laws also prohibit retaliation. Examples: FLSA, FMLA, NLRA, USERRA. • Virginia laws may also be applicable. Examples: workers’ compensation retaliation; termination for lodging safety complaint; wrongful discharge in violation of Virginia public policy (i.e., terminate employee who refuses to perform an illegal act).

22. “Protected Concerted Activity” Under NLRA • Under NLRA, employees have “Section 7” right to engage in protected, concerted activity (PCA) about their terms and conditions of employment for employees’ mutual aid or protection. • NLRB has aggressively acted to support employees who purportedly engage in PCA. • Example: Employee Facebook posting critical of management & soliciting support of co-workers. NLRB position is that employer likely cannot terminate employee for such posting.

23. So What Should Companies Do Now? • Determine what whistleblower laws apply to your company. • Must create a culture of compliance. • Top Executives must lead Company commitment

24. Code of Ethics/Legal Complaint Policy • Company commitment – will not tolerate any violations of applicable law. • Create environment – employees may lodge concerns or complaints without fear of any retaliation. • Spell out the complaint protocol – with multiple avenues (not just chain of command). • Encourage prompt reporting of concerns • Signed acknowledgement by employees.

25. Educate Management as to Company Commitment • Robust policy is a good start • Invest time/resources to educate management as to the applicable laws, the Company’s policies, and expectations • Manager must promptly inform HR if she receives complaint from employee • Manager must also receive training as to appropriate documentation & emails

26. Internal Investigation of Complaint (This could be stand alone topic!) • Company must take complaint seriously and promptly and thoroughly investigate • Carefully Determine Who will lead investigation (impeccable character and judgment) • Control documentation that Company receives/obtains • Be prepared to justify decision. • Follow Up with Employee (& Document)

27. Subsequent Adverse Action • Challenge: when can Company take adverse action (e.g., termination) against employee who previously engaged in protected activity? • Temporary proximity can be factor (why today???) • Company minimizes its legal risk if it can show (preferably with objective evidence) that it has a legitimate, non-retaliatory reason for taking adverse action against employee.