Key topics covered:
- What is whistleblower retaliation?
- What whistleblower protection is offered under the False Claims Act?
- What job protection is offered for SEC and CFTC whistleblowers?
- What whistleblower job protection is offered under state laws?
- What are some examples of whistleblower retaliation cases under the False Claims Act?
- What are some examples of SEC cases involving whistleblower retaliation?
What is whistleblower retaliation?
Whistleblower retaliation occurs when an employer takes adverse action against an employee, contractor, or agent for reporting suspected wrongdoing. This can include reporting concerns internally, through compliance programs, or directly to government agencies.
Common examples of whistleblower retaliation include:
- Termination or forced resignation
- Demotion or loss of job responsibilities
- Suspension or unwarranted disciplinary action
- Reduction in pay, hours, or benefits
- Unjustified negative performance reviews
- Increased scrutiny or workplace surveillance
- Unfavorable transfers or reassignments
- Removal of duties, projects, or professional opportunities
- Harassment, threats, or hostile remarks
- Isolation or exclusion from meetings or communications
- Blacklisting or actions that prevent future employment
Congress recognized that fear of retaliation discourages individuals from reporting fraud and misconduct. As a result, federal and state whistleblower protection laws provide legal remedies for those who experience retaliation after coming forward.
Several major statutes protect whistleblowers from retaliation. The False Claims Act allows individuals to seek compensation and job-related relief when retaliation occurs, including in cases involving qui tam lawsuits or investigations into fraud against the government. This is commonly referred to as qui tam retaliation.
Whistleblowers who report violations to the Securities and Exchange Commission or the Commodity Futures Trading Commission are protected under the Dodd-Frank Act. These protections extend to retaliation tied to reporting securities or commodities fraud and include safeguards against restrictive confidentiality agreements that attempt to silence whistleblowers.
Because retaliation claims often involve multiple laws and overlapping protections, working with experienced whistleblower protection attorneys can be critical to understanding your rights and pursuing appropriate legal action.
What whistleblower protection is offered under the False Claims Act?
Individuals who face whistleblower retaliation because they support or pursue a “qui tam” lawsuit are protected under Section (h) of the federal False Claims Act.
The False Claims Act protects employees as well as contractors and agents against employer retaliation. Those who take lawful steps using whistleblower retaliation lawyers to investigate or bring a False Claims Act action are covered. The law says that “if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment,” then that individual can seek compensation.
If there is job or work-related retaliation, whistleblowers are entitled “to all relief necessary to make the employee . . . whole,” according to the False Claims Act. This type of whistleblower protection can include reinstatement, two times the amount of back pay, interest on back pay, reimbursement of litigation costs and reasonable attorneys’ fees and compensation for special damages.
What job protection is offered for SEC and CFTC whistleblowers?
The Dodd-Frank Act prohibits employers from firing, demoting, suspending, threatening, harassing or discriminating against any individuals or whistleblowers who provide information to the SEC or CFTC or assist the SEC or CFTC in an investigation.
However, SEC whistleblowers must first report the securities law violations to the SEC before they suffer job retaliation or else they are not covered by Dodd-Frank’s anti-retaliation provisions. This was decided by the Supreme Court in what’s known as the “Digital Realty” case.
Whistleblowers who suffer from job retaliation are entitled to reinstatement, back pay and any other damages that occurred.
The SEC has stated that employers may not require employees to sign employment or severance agreements that discourage or impede individuals from contacting the SEC with concerns. The agency has also made clear that confidentiality agreements requiring pre-notification before contacting the SEC violate federal whistleblower protection rules.
Rule 21F-17 prohibits companies from taking any action to impede whistleblowers from reporting possible securities violations to the SEC. Many companies have been fined for violating that rule.
The rule states that “[n]o person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confdentiality agreement . . . with respect to such communications.”
The CFTC has similar rules. The agency can bring an action against an employer who retaliates against a whistleblower, even if the whistleblower doesn’t qualify for a reward.
Even when the agencies takes enforcement actions against entities for job retaliation, SEC and CFTC whistleblowers can sue employers for damages caused by job retaliation.
What whistleblower job protection is offered under state laws?
Many state false claims laws with whistleblower reward provisions also provide whistleblower protection with regard to jobs.
For instance, the California False Claims Act states those who face whistleblower retaliation are entitled to job protection if any “employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of his or her employment.”
Under California law, individuals who experience whistleblower retaliation are entitled to reinstatement with the same seniority status, two times the amount of back pay as well as interest on the back pay, compensation for any special damages, and where appropriate, punitive damages. The company that violated the law also must pay the whistleblower’s litigation costs and attorneys’ fees.
Other states offer similar protection, but it varies and depends on the each whistleblower’s circumstances. For legal advice on how to protect yourself if you are a whistleblower or if you are considering filing a whistleblower lawsuit, consult with an experienced whistleblower retaliation attorney.
What are some examples of whistleblower retaliation cases under the False Claims Act?
The False Claims Act provides protection from retaliation for efforts to stop violations of the False Claims Act. Retaliation claims are often part of a whistleblower’s case under the False Claims Act, but they can also be brought separately. Here are two examples of cases that illustrate some of the ways these issues can arise.
Thompson v. Quorum Health Resources LLC – A federal appeals court upheld a jury’s determination that Quorum’s decision to fire whistleblower Mark Thompson was due to the qui tam complaint Thompson filed against the hospital management company regarding a contract with a Kentucky hospital. Quorum argued that it fired Thompson because he had failed to comply with the company’s code of conduct that required employees to report fraud concerns to the company. The court held that the jury was entitled to conclude from the evidence presented that that was not the real reason Quorum fired Thompson.. Although the government decided not to join Thompson’s qui tam case, he was still protected by the False Claims Act. The lower court awarded Thompson nearly $1 million.
Hill v. Booz Allen Hamilton Inc. – Surendrani Hill sued her employer, Booz Allen Hamilton, for retaliating against her for conducting an extensive investigation into an Air Force contractor’s billings to the government for possible fraud. The contractor was cleaning up environmentally sensitive sites at an Air Force base on Guam, and Hill’s job was to provide oversight of key documents for the cleanup under a Booz Allen contract with the Air Force. Booz Allen put her on probation because of “unprofessional and disrespectful behavior toward a contractor,” among several reasons, and later fired her. Booz Allen argued that it did not retaliate because it was unaware that Hill was engaged in efforts to stop fraud against the government. But the court held that a jury could conclude that Booz-Allen did have notice. Although Hill did not file a qui tam lawsuit, the court observed that “the case law is clear that a retaliation claim can be maintained even if no FCA [False Claims Act] action is ultimately successful or even filed.”
What are some examples of SEC cases involving whistleblower retaliation?
HomeStreet Inc., a Seattle-based financial services company, paid a $500,000 penalty to settle charges that it conducted improper hedge accounting and later took steps to impede potential whistleblowers. The SEC said HomeStreet tried to determine the identity of a presumed whistleblower after the SEC requested documents related to hedge accounting from the company, suggesting to one individual considered to be a whistleblower that the terms of an indemnification agreement could allow HomeStreet to deny payment for legal costs during the SEC’s investigation. The SEC also penalized HomeStreet for requiring former employees to sign severance agreements waiving potential whistleblower awards or risk losing their severance payments and other post-employment benefits.
After learning that that an employee had reported potential violations to the SEC, Paradigm Capital Management, an Albany, N.Y.-based hedge fund advisory firm, removed him from his head trader position, tasked him with investigating the conduct he reported to the SEC, changed his job function from head trader to a full-time compliance assistant and stripped him of his supervisory responsibilities. The SEC fined Paradigm Capital Management, an Albany, N.Y.-based hedge fund advisory firm, and its owner $2.2 million for engaging in prohibited principal transactions and retaliating against the employee.
If you are considering becoming a whistleblower, please consult with an experienced whistleblower attorney to be sure you are protecting your rights. Phillips & Cohen offers free, confidential consultations. Contact us.
Whistleblower Retaliation & Protection FAQs
Does a whistleblower need to win their case to be protected against retaliation under the FCA?
No. Whistleblowers may be protected from retaliation even if a False Claims Act or qui tam case is unsuccessful or never filed. Anti-retaliation protections focus on whether the individual engaged in protected activity and experienced retaliation as a result.
Who is covered by the False Claims Act anti-retaliation protections?
The False Claims Act’s anti-retaliation provisions generally protect employees, contractors, and agents who experience retaliation because of lawful efforts to stop or report fraud against the government. Coverage is not limited to traditional employees and may apply even if a qui tam lawsuit is never filed.
What constitutes “protected activity” under the False Claims Act?
Protected activity under the False Claims Act includes lawful actions taken to stop, investigate, or report suspected fraud against the government. This can include internal reporting, raising compliance concerns, or assisting in an investigation related to potential False Claims Act violations.
How can I tell if I have been retaliated against for whistleblowing?
Retaliation may involve negative employment actions that occur after protected whistleblowing activity, such as termination, demotion, reduced pay, unfavorable reassignment, disciplinary actions, or other adverse treatment. The timing and context of these actions may be relevant when assessing whether retaliation occurred.
How can a whistleblower retaliation attorney protect me?
A whistleblower retaliation attorney can help explain which laws may apply to your situation, evaluate whether workplace actions may qualify as unlawful retaliation, and outline potential options based on the specific facts involved. A whistleblower protection attorney can also help ensure communications and reporting are handled appropriately, assist with preserving relevant information, and represent you in discussions or legal proceedings related to retaliation claims. Because whistleblower laws vary by statute and involve strict requirements and deadlines, legal guidance can help protect your rights and avoid missteps.