Where HR Meets Legal

One of the most daunting and difficult chores facing human resource professionals at all companies is handling whistleblower claims, where the law seems increasingly stacked against the employer. This summer, Congress added to the problem when it passed the Dodd-Frank financial reform bill, which President Obama signed into law in late July.

“This is where HR meets legal,” says Gregory Keating, a lawyer who specializes in employment law for the national law firm of Littler Mendelson and author of “Retaliation and Whistleblowing: A Guide for Human Resources Professionals and Counsel” (2010). Keating and partner Kevin O’Neill recently led a webinar on the issue for HR.com, titled “Preventing Whistleblower Claims: Don’t win the battle and lose the war.”

“Every major law affecting employers protects whistleblowers,” says Keating. “Discrimination, safety, wage/hour, securities fraud law, all prevent retaliation against employees who come forward with complaints of potentially unlawful activity.” Retaliation claims, he said, “are now the second most frequently filed claim under federal anti-discrimination laws—filed three times as often as sexual harassment.” According to Littler’s data, retaliation cases have grown from 16% of all anti-discrimination claims filed in fiscal year 1993 to 36% in 2009.

These claims, says Keating, “are also the hardest to defend.” It is common, he notes, for the employer to “win the underlying claim of unlawful conduct” and lose on the claim of unlawful retaliation. The result can be exoneration for the company against the charge that it did something unlawful, and a multi-million dollar judgment or settlement on the issue of retaliation.

In May 2008, Keating noted, “A former Boston city employee, who was allegedly terminated for filing a discrimination claim, was awarded $4.5 million, even though her prior discrimination claim failed.”

What constitutes retaliation? It is, argues Keating, a subject to a loose standard, and one that is getting looser. In 2006, the U.S. Supreme Court, in Burlington Northern v. White, held that retaliation includes any action that, in the opinion written by Justice Stephen Breyer, “well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.”

Three years later in 2009, the court embellished the standard in Crawford v. Metropolitan Government of Nashville by adopting a broad view of what constitutes employee “opposition” to an employment practice, triggering whistleblower protections. Opposition, the court found in an opinion written by Justice David Souter, involves a broad range of activities, including filing an internal complaint, filing a formal charge, requesting a meeting with a manager, or even complaining about the treatment of another employee. “You need to be careful when anybody in any way has voiced opposition to an employment practice,” said Keating.

Not all employees complaints are protected, noted Keating. Disruptive behavior, defaming supervisors or coworkers, or “improperly disclosing confidential information or records” is not protected activity.

The law is also evolving, noted Keating. What’s the standard on “third party retaliation?” How about if a fiancée of an employee files an equal employment opportunity complaint? The 3rd, 5th, 6th, and 8th federal circuit courts of appeal say that is a “cause of action,” triggering whistleblower protection. The 4th, 7th, and 11th circuits have ruled it does not.

In the meantime, Keating added, states are also broadening the protections they offer whistleblowers under state law.

For HR folks, the key with whistleblower cases, says Keating, is “document, document, document.” Added O’Neill, put the emphasis “on prevention. You’ve got to control your first responses” to a complaint. Employers, he notes, “owe employees a good faith attempt to guide them through the process” if the employee brought the complaint up in good faith, “even if false.”

Even then, said Keating and O’Neill, the adage that “no good deed goes unpunished” may come into play. Said Keating, “An employer’s good faith efforts to avoid taking an adverse action based on retaliatory motives may, in fact, serve as evidence that the employee’s protected activity influenced” the employer’s actions.

The new financial reform law, according to an analysis by Marcia E. Goodman and Courtney L. Anderson of the Mayer Brown law firm, “significantly enhances the protections afforded to corporate whistleblowers, expands the companies subjected to [Sarbanes-Ocley Act] whistleblower protections, relaxes the timing and manner in which retaliation claims can be made, and stiffens the penalties for such retaliation.” The new law allows claims up to 10 years after the alleged retaliation, provides the possibility of double back pay, and allows the whistleblower, if successful, to get up to 30% of the sanctions imposed on the company by the Securities and Exchange Commission.

Keating offered 10 ways to avoid retaliation claims in whistleblower cases:

1. Keep “systematic, detailed and accurate documentation of performance problems.”
2. Don’t display “any expression of hurt, anger, or resentment” about a complaint.
3. “Be alert” to activity by employees protected under the law, “as it can assume a variety of forms.”
4. Take complaints of harassment, discrimination, or illegal activity seriously “and make sure they are investigated thoroughly.”
5. Train managers and supervisors well on their duty “to avoid retaliation” in all its forms.
6. Take retaliation claims seriously.
7. Consider appearances before taking any adverse action against an employee who has “engaged in protected activity.”
8. “Do not use the next layoff as a way to get rid of a complaining employee, unless the business case is legitimate.”
9. Make sure your company “has good anti-retaliation policies.”
10. Remember that “whistleblowers, no matter how disliked by their employers, may be perceived as heroes by the public.”

Said O’Neill, “There are lots of legal land mines out there.” Now there are even more.

—Kennedy Maize is MANAGING POWER’s executive editor.