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Articles Posted in Whistleblower Laws

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The Sixth Circuit Court of Appeals recently tightened the definition of who could be considered an employee whistleblower in Sexton v. Panel Processing, Inc.

designing-on-a-tablet-1361061-m.jpgThe case involved Brian Sexton, who worked as a general manager for Panel Processing in its Coldwater, Michigan facility, as well as trustee for the company’s employee retirement program. In 2011, Sexton and one of the other trustees campaigned on behalf of two employees who were running for Panel Processing’s board of directors. Though these employees won election, the board refused to seat them because it would violate the company’s bylaws, which placed a limit on the number of inside directors. The board also removed Sexton and the other trustee from the retirement plan trusteeship.

Sexton responded by sending an email to the chairman of the board. In it, he complained that the board’s actions were violations of both ERISA and the state’s Corporations Business Act, as well as other state and federal laws. Sexton stated that he intended to bring these violations to the attention of the federal Department of Labor and the state Department of Licensing and Regulatory Affairs unless they were corrected immediately.
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Last month, the United States Supreme Court issued a ruling that provided for more protection for whistleblowers that work for private contractors of public companies in Lawson v. FMR. The six to three decision expanded the protections of the federal Sarbanes-Oxley Act of 2002, which was established to promote accountability from publicly traded companies following a wave of scandals around that time.

whistle-718988-m.jpgIn Lawson, Jackie Hosang Lawson was employed as a Senior Director of Finance for Fidelity Brokerage Services, LLC. Fidelity Brokerage was related to the mutual fund corporation, Fidelity. Lawson eventually objected to the financial reporting practices of FMR, LLC, which was a Fidelity mutual fund advisor. In a whistleblower filing that she submitted to the Occupational Safety and Health Administration, which reviews Sarbanes-Oxley claims, Lawson argued that due to her objections, she suffered retaliation and was forced to resign. The case eventually went before the First Circuit, where Fidelity argued that Sarbanes-Oxley’s protections were meant to apply only to the employees of public companies, not their private contractors. The First Circuit agreed, in a divided opinion, and Lawson petitioned the Supreme Court.

The Sarbanes-Oxley Act states that “[n]o public company… or any… contractor of such company may [retaliate] against an employee… because of [a Sarbanes-Oxley protected activity].” However, a decision issued later by the Department of Labor’s Administrative Review Board (ARB) found that the employee of a contractor who acted as a whistleblower against a public company also received protection under the Act. The problem was that “employee” under the Act had no definition. In reading the rest of the Act, it was possible to come up with two definitions: one that applied just to employees of public companies, and another that applied to employees of contractors and agents.
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A whistleblower, in very simple terms, is someone who realizes something may be not quite right and decides to tell someone else about it. While kids who perform this same type of service are often called tattle-tales, adults should not be chastised or punished for doing the same. If an employer appears to be operating in a way that breaks a federal law, an employee should feel comfortable telling the appropriate people about it so the situation can be investigated, and remedied if necessary.

Most workers employed by the government and in the private sector are protected by whistleblower laws. Employees are covered by a provision of the Civil Service Reform Act of 1978 and the Whistleblower Protection Act of 1989(WPA). Under these acts, an employee who believes something they witnessed was in violation of a federal law, was fraudulent, was wasteful of money or resources, or might cause harm to the general public has the right to report it to the person or group of their choice without fear of retaliation. If an employee has reported some type of federal misconduct and has been retaliated against, he can take legal action under WPA and seek restitution such as repayment of lost wages if he was wrongfully terminated and other compensatory damages. This law also states that federal officials who have retaliated against a whistleblower may be subject to suspension or dismissal.

Most privately employed workers are also protected if they report a situation that they think breaks a federal law. The United States Department of Labor (DOL) handles whistleblower claims brought by workers in the private sector. If the whistleblowers do not think the DOL has administered their case in a timely manner, the law allows them to then file a lawsuit and have a trial by jury.

On November 27, 2012, President Obama signed new legislation providing additional protection for federal employees. Called the Whistleblower Enhancement Act, it is meant to further encourage those already covered by WPA to continue reporting governmental abuse of power and funds and it also offers protection to some groups who were exempt under the previous acts. This new act changes the burden of proof, making it easier for a whistleblower to prove their case. The Office of Special Counsel, which handles whistleblower cases, will no longer be responsible for paying defendants’ attorneys’ fees if they lose the case. All airport baggage screeners are now covered by whistleblower laws as are those who work in intelligence for the government. Scientists working for the government who report alleged censorship of their work are also now protected.
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