Whistleblowers are sometimes hesitant to report fraudulent activity in their workplace for fear of employer retaliation, such as demotion or termination. However, in the past few years, a number of legislative changes have provided increased protections for whistleblowers to encourage their bravery and honesty. A recent decision from the United States Court of Appeals for the Sixth Circuit points to even greater protection for whistleblowers, allowing more claims to surface without the fear of employer retaliation.
A federal judge recently ruled that an employee whistleblower could bring an employer retaliation lawsuit against former employer BAE Systems, despite the existence of an arbitration clause in the employment contract. Two employees of BAE Systems filed a federal whistleblower suit alleging that BAE fraudulently falsified time sheets on government cost-plus contracts (United States ex rel. Matt Paige and James Gammon v. BAE Systems Technology Solutions & Services, Inc.). The employees claimed that when they raised the issues with management, they were demoted, transferred, placed on leave, given lesser duties, harassed, and eventually terminated. BAE moved to dismiss the retaliation suit, claiming that the plaintiffs signed employment contracts allowing for termination with or without cause and that the contracts’ arbitration clauses required for issues arising about termination to be resolved outside of the courtroom.
Even though federal courts generally favor arbitration, the court ruled that a retaliation claim is “purely statutory and exists independent of the Agreement.” The plaintiffs could have filed a False Claims Act complaint even if they had not been employees. The court also chose to apply a plain-language interpretation of the arbitration clause and found that the retaliation claim was beyond the scope of the arbitration clause.
OSHA’s Whistleblower Protection Program provides protection from employer retaliation following an employee’ report of alleged fraudulent activity. This means that an employer cannot retaliate by taking adverse action against workers in the form of termination, blacklisting, demoting, or any other negative action. If an employer engages in whistleblower retaliation, the whistleblower can recover reinstatement of job, lost wages, attorneys’ fees and litigation costs, and additional compensation. New whistleblower protection legislation and amendments to existing protection law have been on the rise in recent years, including a pledge by President Obama to “strengthen whistleblower laws to protect federal workers who expose waste, fraud, and abuse of authority in government.”