Be Prepared Before You Blow the Whistle
Content
Be Prepared Before You Blow the Whistle
Protection Under State Whistle-blowing Laws
September/October 2010 By Patricia ! Patric"# Ph!$!# %&'# %P # %(&) + o,t o- +
*erage
.o, might one day need to be a whistle-blower! Be -orewarned/ .o,r personal and pro-essional li*es will s,--er! 0ew research on state whistle-blower laws,its shows it1s li"ely yo,1ll be -ired and will lose yo,r case! B,t then# doing the right thing ne*er meant that right things wo,ld happen to yo,! 2magine this scenario/ go*ernment contractor is o*ercharging yo,r state go*ernment agency -or goods and ser*ices! .o, "now this beca,se yo, once wor"ed in the billing department o- the contractor! .o, report this to yo,r s,per*isor who terminates yo, shortly a-terward! So# yo, -ile a complaint with the &lorida %ommission on 3,man 4elations 5&%346# which reinstates yo, to yo,r position! .o,r -ormer employer ta"es the matter to co,rt ,nder &lorida1s whistle-blowing law and has yo, remo*ed again! 7he co,rt o*ert,rns the &%341s decision beca,se the whistleblower law re8,ires a complainant to -ile within 90 days o- the alleged incident and yo, -iled more than 100 days later! lso# the &%34 didn1t ha*e :,risdiction to hear yo,r case! Once again# yo,1re o,t o- a :ob! )y sample o- state-le*el cases shows that o,tcomes s,ch as this aren1t ,n,s,al in whistle-blower cases -iled in merican states! Wo,ld-be whistle-blowers might wonder i- it1s worth it# yet many contin,e to report
wrongdoing! )ost recently# my Sto,pe# %&'# the 2010 %&' Sentinel ward recipient# blew the whistle! Others who did the right thing incl,de %ynthia %ooper# %&'; Sherron Wat"ins; Pamela )eyer $a*is; B,nny (reenho,se; )arta ndreasen; $r! $a*id <! (raham; and William San:o,r! Oco,rse# all paid a high price to come -orward! s %&'s# we might -ind it necessary to report wrongdoing# b,t we sho,ld proceed with ca,tion be-ore blowing the whistle! )y re*iew o- state-le*el laws,its s,ggests that being entitled to protection ,nder a state whistle-blower stat,te and recei*ing that protection can be two di--erent matters! (This article isn’t meant to replace legal advice. Please consult local counsel. – ed.) STATE WHISTLE-BLOWING LAWS ll the U!S! states ha*e laws to protect p,blic employees -rom retaliation! )ost o- the state whistle-blowing laws were enacted to enco,rage p,blic employees to report -ra,d# waste# and ab,se in go*ernment agencies! Some laws protect only p,blic employees; others incl,de go*ernment contractors and pri*ate-sector employees! )ost o- the states also ha*e laws co*ering pri*ate-sector employees! 3owe*er# many o- these laws protect reports in*ol*ing wor"place sa-ety! 7hey were enacted decades ago to protect employees -rom retaliation when reporting occ,pational sa-ety iss,es! P,blic and pri*ate employees can ,se them# b,t they might not apply to all sit,ations! O*er the years# reporting in other speci-ic sit,ations has been protected! )any states enacted anti-retaliation cla,ses -or speci-ic claims or ind,stries! &or e=ample# 4hode 2sland has anti-retaliation cla,ses in stat,tes pertaining to gaming# n,rsing homes# health-care -acilities# nonpro-it hospitals# ins,rance -ra,d# health maintenance organi>ations; and asbestos abatement! nti-retaliation cla,ses are designed to protect p,blic and pri*ate employees wor"ing in speci-ic cases! THE ESSENCE O BLOWING THAT WHISTLE Whistle-blowing# as it relates to -ra,d# is the act o- reporting -ra,d# waste# and ab,se! 4eporting any act o- wrongdoing is considered whistle-blowing# regardless i- it1s reported by a p,blic or pri*ate employee or to persons inside or o,tside o- the *ictim organi>ation! nyone can report wrongdoing# b,t the le*el o- protection an employee will recei*e will di--er depending on whether they1re p,blic or pri*ate# to whom they report# the manner in which they report# the type o- wrongdoing they report# and the law ,nder which they report! 7a"e the 7e=as Whistle-blower ct# -or e=ample! 2t protects p,blic employees -rom retaliation who report *iolations o- law to appropriate law en-orcement agencies# pro*iding the employee -iles a grie*ance within ?0 days o- when the employer1s ad*erse employment action occ,rred or
was disco*ered by the employee! 7he employee m,st initiate action ,nder the grie*ance or appeal process o- the go*ernmental employer be-ore -iling a laws,it! 7he employee m,st also report the *iolation in good -aith# pro*e the retaliation is the res,lt o- the whistle-blowing# and identi-y the laws *iolated and the persons engaged in the *iolations! 'mployees can be compensated -or their losses# b,t the entity can de-end itsel- by asserting its actions were ,nrelated to the whistle-blowing! 7his is an a--irmati*e de-ense that can be asserted by any employer! 'mployers ,sing an a--irmati*e de-ense will admit they too" the ad*erse personnel action b,t claim the action was d,e to e*ents independent o- the whistle-blowing! 2- yo, -ind 7e=as1 Whistle-blowing Law da,nting# yo,1re probably not alone! )y re*iew ostate-le*el laws,its -iled by whistle-blowers shows that it1s di--ic,lt to recei*e protection ,nder many o- the state laws! !ESEA!CH "ETHO# 2 selected a random sample o- laws,its -rom the statewide cases reported in the Le=is0e=is database between 1??@ and 200?! 2 "eyed in the search term Awhistle-blowerB and -o,nd CD0 cases in*ol*ing whistle-blowers who s,ed their employers -or alleged retaliation -ollowing the reporting o- a wrong-,l act! 2 strati-ied the laws,its chronologically by state and selected e*ery -o,rth case to obtain a random sample o- ?+ cases! 2 cond,cted a content analysis o- each case to identi-y/ 16 the type oretaliation ta"en against the whistle-blower 26 the type o- wrongdoing reported C6 the p,blic policy iss,ed @6 the o,tcome -or the whistle-blower +6 the reason the whistle-blower won/lost the laws,it 96 whether the whistle-blower was a p,blic ser*ant E6 the law ,sed to -ile the case! "OST WHISTLE-BLOWE!S A!E I!E# Se*enty--o,r percent o- the whistle-blowers in my re*iew were terminated! nother 9 percent were s,spended and + percent were trans-erred against their wishes! 7he remaining 1+ percent were gi*en poor e*al,ations# demoted or harassed! 7he res,lts# s,mmari>ed in E$hi%it & '%elow(# indicate that retaliation occ,rs# altho,gh this re*iew can1t determine how o-ten!
ppro=imately 90 percent o- the laws,its were -iled in the past 10 years; howe*er# it1s impossible to say why employees are increasingly t,rning to the co,rts to sol*e their problems! Perhaps employees are reporting wrong-,l acts more -re8,ently and -iling more -ri*olo,s laws,its! 2t1s also possible that employers are committing more acts owrongdoing and retaliating more o-ten! 7hen again# it1s possible the rise is d,e to the increasingly litigio,s nat,re o- merican society!
7he whistle-blowers in this sample didn1t -are well in their laws,its! &i-ty--i*e percent lost their cases! &o,rteen percent lost beca,se they -ailed to pro*e their cases! 'le*en percent -ailed to pro*e a ca,sal connection between the alleged retaliation and the whistle-blowing! Only 22 percent won their laws,its! O- these# 2 percent were reinstated to their old :obs and D percent won damage awards! 7he remaining 2C percent o- the cases were remanded -or a new trial! 7o pre*ail# employees will probably ha*e to lin" their whistle-blowing to the retaliation! 7his can be di--ic,lt -or employees ha*ing problems in the wor"place beca,se employers will claim their ad*erse personnel actions were based on the employees1 poor per-ormances F not the employees1 decisions to blow the whistle! 2t1s especially easy -or employers to assert this claim ithe person who cond,cted the retaliation claims no "nowledge o- the whistle-blowing! GET TECHNICALITIES CO!!ECT 7wenty-two percent o- the whistle-blowers lost beca,se they didn1t comply with some technicality in the laws! s disc,ssed pre*io,sly# the laws are *ery speci-ic on how whistleblowers m,st report the wrongdoing! &ailing to comply with any aspect o- the law will res,lt in a loss o- protection! Si= percent o- the employees lost beca,se they -ailed to e=ha,st all their internal remedies be-ore reporting their concerns e=ternally! )any laws re8,ire the employee to report internally -irst to gi*e the employer an opport,nity to correct the matter! 7his minimi>es the potentially de*astating impact that p,blic reports can ha*e on organi>ations when the claims don1t ha*e merit or co,ld be handled more e--ecti*ely internally! 2nternal reports can also allow the employer to conceal the ,nlaw-,l acti*ity# i- they are so inclined! nother + percent lost beca,se they -ailed to report the act o- wrongdoing correctly! Some laws re8,ire the witness to report the wrongdoing in writing within a certain period o- time a-ter it1s disco*ered! Other laws re8,ire the whistle-blower to state the speci-ic laws that were bro"en! 7he p,rpose o- these re8,irements is to pro*ide the employer with speci-icity so it can correct the problem! Case i) poi)t* high-le*el o--icer# wor"ing -or a go*ernment de-ense contractor# disco*ered that his employer was o*erbilling the go*ernment# s,pplying de-ecti*e parts# and engaging in the ,na,thori>ed ,se o- go*ernment e8,ipment! 3e re-,sed to participate in the acti*ities and reported them to his employer1s go*ernment liaison o--icer only to -ind himsel- terminated a-terward! 3e s,ed ,nder &lorida1s whistle-blower law and lost beca,se he -ailed to -irst in-orm his employer o- the alleged acti*ity in writing! &i*e percent o- the employees in the sample lost beca,se they -iled their laws,its ,sing inappropriate laws! %hoosing an appropriate law so,nds easy# b,t that isn1t always the case! Case i) poi)t* -light engineer# wor"ing -or a &lorida-based airline and also li*ing in the state# was terminated a-ter he insisted on delaying a -light at 0ew .or"1s <ohn &! Gennedy irport to
repair the plane1s hydra,lic system! 3e -iled his s,it in a &lorida co,rt ,nder a 0ew .or" State labor law beca,se# at that time# &lorida didn1t ha*e a whistle-blower law! 7he co,rt dismissed his complaint and the engineer appealed! 2n the meantime# &lorida enacted a whistle-blower law and it co*ered pri*ate-sector employees! 7he case went all the way to the &lorida S,preme %o,rt# b,t the engineer lost beca,se &lorida1s whistle-blower law didn1t apply retroacti*ely! P!I+ATE-SECTO! E"PLOYEES HA+E IT TO,GH )ost whistle-blower laws are intended to protect p,blic-sector employees who report *iolations a--ecting p,blic health and sa-ety! Pro*ing p,blic interest is easy -or p,blic-sector employees beca,se their wor" in*ol*es p,blic protection! 2t1s not as easy -or pri*ate-sector employees! 'le*en percent o- the pri*ate-sector whistle-blowers in the sample lost their cases beca,se the matters didn1t in*ol*e p,blic policy! 7he case o- two n,rses wor"ing in a pri*ate n,rsing home e=empli-ies the di--ic,lties pri*ate-sector employees can ha*e winning in co,rt e*en when their cases appear to in*ol*e p,blic interest! Case i) poi)t* hospital -ired one o- its therapists si= days a-ter he told representati*es -rom an accrediting organi>ation d,ring a site *isit that the hospital1s therapists completed patient charts sometime d,ring their shi-ts rather than immediately a-ter treating patients as re8,ired by the accrediting organi>ation! 7he therapist# who had wor"ed -or the hospital -or 2C years# s,ed -or retaliation and lost beca,se he co,ldn1t con*ince the co,rts that charting was a matter o- p,blic policy! 7he therapist arg,ed that the 2llinois )edical Patient1s 4ights ct gi*es patients the right to so,nd and consistent care# and -ailing to immediately chart :eopardi>es patient care! 7he co,rt said it wasn1t eno,gh to claim a broad or generali>ed p,blic policy! 7o pre*ail# the therapist needed to show how a lac" o- immediate charting *iolates an 2llinois state law# and the therapist wasn1t able to -ind an 2llinois law that re8,ires immediate charting! Only the co,rts can decide whether an iss,e is a matter o- p,blic policy# and this co,rt wasn1t willing to -ind it so! &i*e percent o- the pri*ate-sector employees in this sample lost beca,se they mista"enly -iled charges ,nder stat,tes that co*ered only p,blic employees! 0ot all the laws protect pri*ate-sector employees! Whistle-blowers need to ma"e s,re they are co*ered by the laws they ,se! WHISTLE-BLOWE!S T!Y TO P!OTECT P,BLIC INTE!EST 'ighty--i*e percent o- the cases in*ol*ed iss,es o- p,blic health# sa-ety# or interest! 7wenty--i*e percent in*ol*ed p,blic sa-ety! &i-teen percent in*ol*ed p,blic health! Si=teen percent in*ol*ed the misappropriation o- p,blic -,nds! 'ighteen percent in*ol*ed matters o- general p,blic interest# and 11 percent in*ol*ed ci*il rights *iolations! P,blic employees -iled 90 percent o- the cases in the sample# and they tended to witness the most serio,s *iolations o- p,blic policy! P,blic engineers reported the most serio,s o--enses! 7hese incidents ,s,ally in*ol*ed p,blic e=pos,re to to=ic chemicals or waste! P,blic n,rses also
reported serio,s iss,es! 7heir complaints ,s,ally in*ol*ed patient neglect and -atal accidents! 7he complaints o- police o--icers were also *ery serio,s and ,s,ally in*ol*ed internal corr,ption!
$amage awards were o-ten gi*en to whistle-blowers who reported serio,s p,blic policy iss,es! n analyst in a %ali-ornia p,blic ho,sing a,thority# -or e=ample# reported that someone was lea"ing con-idential bid in-ormation! 7he whistleblower was -ired# b,t was awarded a H1!C million damage award in co,rt! 2n Pennsyl*ania# a ho,sing a,thority employee reported sel--dealing and recei*ed a H?00#000 damage award -or being terminated! 7hese awards were gi*en to whistleblowers reporting irreg,larities in*ol*ing p,blic -,nds! Large awards were also gi*en to whistle-blowers reporting *iolations o- p,blic health and sa-ety! %onnectic,t water treatment plant engineer was terminated a-ter reporting plant managers -or concealing that the town1s water s,pply was inade8,ately treated! 7he co,rt awarded the engineer H12E#000 -or lost wages! 7hese awards s,pport the assertion that whistle-blowers are p,blic employees attempting to resol*e serio,s *iolations o- p,blic policy! 7he *iolations# s,mmari>ed in E$hi%it - 'a%o.e(# show that 1+ percent o- the employees acc,sed their employers o- iss,ing -alse reports! &o,rteen percent alleged *iolations in*ol*ing air or water 8,ality! 7en percent alleged nepotism or sel--dealing! 0ine percent alleged patient ab,se or neglect! 0ine percent alleged discrimination or ci*il rights *iolations! 'ight percent alleged miscellaneo,s *iolations and another eight percent alleged *iolations o- state labor laws or wor"place sa-ety!
THE LAWS ,SE# BY WHISTLE-BLOWE!S '=amining the laws whistle-blowers ,se to see" protection can pro*ide insights into why they o-ten lost their cases! Si=ty-one percent o- the whistle-blowers s,ed ,sing a state whistle-blower law! 7wel*e percent ,sed an anti-retaliation cla,se in a labor law! 'ight percent s,ed ,nder contract law# and + percent s,ed ,nder the U!S! %onstit,tion or other ci*il rights law! &i*e percent began by ha*ing their cases heard in a ci*il ser*ice or ,nion hearing# and 2 percent s,ed to appeal a pro-essional code o- cond,ct *iolation! 7he remaining E percent -iled ,nder a miscellaneo,s law! 7he laws are s,mmari>ed in E$hi%it / '%elow(!
Si=ty--o,r percent o- the whistle-blowers who s,ed ,sing a labor or employment law lost# despite the -act that they barely blew the whistle! 2n most o- these cases# the employees were terminated shortly a-ter beginning their in8,iries# b,t they didn1t lose -or ma"ing ,ns,bstantiated allegations! 7hey lost beca,se the matters in their cases weren1t o- p,blic interest! Case i) poi)t* n a,ditor# wor"ing -or a 0ew .or" %ity bro"erage -irm# reported that corporate o--icers were engaged in money la,ndering! 7he -irm terminated him# e*en tho,gh the -irm1s policy man,al speci-ically prohibited retaliation against employees engaged in in*estigations! 3e -iled a complaint with the 0ew .or" Stoc" '=change and recei*ed compensatory damages in arbitration! 3e then -iled a laws,it ,nder a labor law to see" p,niti*e damages! 7he a,ditor lost beca,se p,niti*e damages are awarded only when the perpetrator engages in a pattern o- cond,ct aimed at the p,blic in general! 7he whistle-blower in this case wasn1t able to pro*e s,--icient p,blic interest! 7he whistle-blowers in the sample who s,ed ,nder contract law were independent contractors! 7hey s,ed -or breach o- contract when they were terminated prior to the end o- their employment contracts and lost when they -ailed to pro*e the ca,sal lin" between their termination and whistle-blowing! Some o- the co,rts allowed the employers to terminate these employees Aat willB despite their employment contracts! Case i) Poi)t* 7he most interesting contract law case was -iled by mechanics o- a chemical company! 7hey told the Occ,pational Sa-ety and 3ealth dministration 5OS3 6 that their employer e=posed the chemical plant shop to asbestos# and then they were terminated! 7he employees co,ld ha*e -iled a claim ,nder OS3 # the 7e=as whistle-blowing law# or contract law! 7hey decided to s,e -or breach o- contract beca,se ,nder contract law they only had to pro*e/ 16 that they had an employment agreement 26 the employer inter-ered with that agreement and C6 the employer1s inter-erence res,lted in damages! 7he mechanics pro*ed their case and were awarded compensatory damages -or lost wages! 2t wasn1t clear -rom the case# b,t it1s li"ely they also were reinstated to their positions! Some o- the whistle-blowers s,ed to protect their rights to -ree speech ,nder the &irst
mendment o- the U!S! %onstit,tion! 7hese employees claimed the employer1s retaliation was a *iolation o- their right to -ree speech! 7o pre*ail# these whistle-blowers had to pro*e the iss,e was a matter o- p,blic interest! 7hat wasn1t always easy! Utah -ire-ighter# -or e=ample# claimed that his department1s new protocol -or handling wild-ires was ,nsa-e! 7he co,rt loo"ed to whether the employer1s interest in promoting e--iciency o,tweighed the employee1s right to *oice p,blic concerns and decided that the manner in which the -ire-ighter *oiced his concerns ,ndermined e--iciency and morale! 7he -ire-ighter had secretly tape-recorded con*ersations with co-wor"ers and :,mped the chain o- command! 7he co,rt held that the -ire-ighter had carried his concerns to protect the p,blic too -ar! 2n another &irst mendment case# a 0ebras"a prison g,ard told a reporter abo,t the serio,s racial problems in his prison! 7he g,ard was terminated# despite the -act that he had permission to participate in the inter*iew! Prison o--icials claimed the g,ard o*erstepped his a,thority to spea" in the inter*iew and that his speech disr,pted prison e--iciency! 7he co,rt held that racial problems are a matter o- p,blic interest and o,tweigh any harm-,l e--ects to prison e--iciency or morale! 7he g,ard was reinstated and awarded attorney1s -ees! )ost o- the whistle-blowers who began their complaints with ci*il ser*ice or ,nion hearings were police o--icers# alleging harassment a-ter reporting internal corr,ption! 7he o--icers lost at hearing and s,ed to appeal those decisions! )ost o- the o--icers were assigned to tas" -orces charged with in*estigating internal corr,ption! 7hey were harassed when the in*estigations led to -indings o- internal corr,ption! ll b,t one lost on appeal beca,se a higher co,rt won1t o*ert,rn a lower co,rt1s decision ,nless it1s arbitrary and capricio,s! 7he only o--icer to pre*ail demonstrated a long pattern o- harassment# which led to his complete mental and physical brea"down! ltho,gh the o--icers ,s,ally lost p,rs,ing this co,rse o- action# as ci*il ser*ants they li"ely were re8,ired to begin with ci*il ser*ice or ,nion grie*ances!
)ost o- the employees who s,ed to appeal decisions that their whistle-blowing *iolated pro-essional codes o- cond,ct lost when the codes re8,ired the pro-essionals to maintain client con-identiality! 7he whistle-blowers arg,ed that employers aren1t clients# and the codes don1t re8,ire employee-employer con-identiality! 7he co,rts still held these employees to a higher standard o- con-identiality! So -ar# the co,rts ha*e applied this standard to attorneys# b,t other pro-essionals with con-identiality cla,ses in their codes o- cond,ct# s,ch as acco,ntants# co,ld be
held to this standard as well! )ost o- the whistle-blowers in the re*iew lost their laws,its! E$hi%it 0 'a%o.e( shows that ++ percent o- the whistle-blowers -iling ,nder a state whistle-blower stat,te lost their cases! Si=ty-o,r percent -iling ,nder a labor law lost# as did 90 percent o- those -iling ,nder the U!S! %onstit,tion or ci*il ser*ice agreement! 3al- o- the employees appealing a *iolation o- a pro-essional code o- cond,ct lost! 7his re*iew co,ldn1t determine why the whistle-blowers ,sed the wrong laws or -iled in inappropriate co,rts! 2t1s clear that many o- the whistle-blowers co,ld ha*e been more s,ccess-,l i- they had been smarter abo,t what and where to -ile! Se*eral -actors play a role in deciding ,nder what law and in which co,rt to -ile! 7hese are iss,es o- :,risdiction and *en,e and are disc,ssed in A$eciding Where to &ileB below! !ESEA!CH THE #ETAILS Whistle-blowers can impro*e their chances o- s,ccess by preparing early and reading the whistle-blowing laws! 7he case law is also important beca,se it shows the precedent already set by the co,rts! 7he better prepared yo, are# the less li"ely yo,1ll ma"e a*oidable mista"es! Case i) poi)t* One whistle-blower made a -atal mista"e when he -iled charges against the indi*id,als who committed the wrongdoing rather than his employer! 3ad he researched the law# he wo,ld ha*e "nown that the term Aemployers#B as ,sed in the )assach,setts1 law that reads Aan employer shall not ta"e retaliatory action against an employe !!!B means the commonwealth and its agencies or political s,bdi*ision! 7here-ore# ,nder the law# the allegations had to be lodged against the employer# rather than the indi*id,al o--enders! Un-ort,nately# he -iled against the o--ending employees and lost his case! nother whistle-blower lost beca,se he -iled claims in two *en,es only to learn later that see"ing protection ,nder one stat,te precl,ded protection ,nder another stat,te! 7his whistle-blower -iled a claim alleging retaliatory discharge ,nder the )innesota Whistle-blower ct and a claim oreprisal discrimination ,nder the )innesota 3,man 4ights ct 5)34 6! 7he whistle-blower presented the claims in co,rt and recei*ed -a*orable decisions on both claims! 7he employer appealed and the S,preme %o,rt decided that the e=cl,si*ity cla,se in the )34 barred the -iling o- any other claims on the matter! n Ohio g,idance co,nselor lost beca,se she -ailed to pro*e that she s,--ered damages -rom the retaliation! 7he Ohio law states that a claim o- retaliation can be bro,ght only where the employee s,--ers a direct monetary loss! 7he Ohio whistle-blower didn1t s,--er a -inancial loss beca,se e*ery time the school district assigned her to a distant wor" location# she complained and was reassigned closer to home! n e*ol*ing iss,e is the e=tent to which whistle-blowers m,st be certain o- *iolations! )any laws already re8,ire the employee to state the speci-ic law that was bro"en! Some co,rts re8,ire whistle-blowers to be certain o- their allegations! 7rends re8,iring certainty will ma"e it
increasingly di--ic,lt -or whistle-blowers to recei*e protection! 5See AGnow the &acts be-ore yo, Blow the WhistleB below!6 #ON1T GET CA,GHT WITH ,NCLEAN HAN#S2 &i*e percent o- the whistle-blowers -ailed to recei*e protection beca,se o- their improper cond,ct! Some o- these whistle-blowers mis,sed their employers1 property; some o- them stole it! 'mployees m,st ens,re their cond,ct is abo*e scr,tiny beca,se some co,rts will apply the Adoctrine o- ,nclean handsB and bar whistle-blowers -rom protection# i- they1*e engaged in miscond,ct directly related to their complaints! Case i) poi)t* %ali-ornia 8,ality ass,rance manager secretly copied con-idential patient records to pro*e that a near--atal incident was ca,sed by h,man error a-ter her hospital-employer appeared to be dodging an in*estigation! 7he manager p,rs,ed an in*estigation and was -ired a -ew wee"s later! 7he manager s,ed -or wrong-,l termination and barely pre*ailed! 7he lower co,rt applied the doctrine o- ,nclean hands and r,led in -a*or o- the hospital! 7he manager appealed! 7he appeals co,rt didn1t dismiss the case b,t signi-icantly limited what the employee co,ld reco*er beca,se o- her ,nclean hands! 7he doctrine o- ,nclean hands can wor" against employers# :,st as it does employees! 2n 2001# a &lorida health-care agency s,bmitted doc,ments containing incorrect in-ormation to the co,rt! 7he whistle-blower pro*ed the in-ormation was -alse and won her case on those gro,nds alone! 7h,s# it1s important -or employers and employees to comport themsel*es with integrity! Whistle-blowers who commit ,nlaw-,l acts to ad*ance their cases don1t do well in co,rt# b,t neither do whistle-blowers who re-,se to commit ,nlaw-,l acts on behal- o- their employers! )ost state whistle-blower laws are designed to protect employees that re-,se to commit ,nlaw-,l acts# b,t it can be di--ic,lt to recei*e that protection! Case i) poi)t* 7e=as dec"hand was as"ed to p,mp the bilges o- the boat into the water# despite a placard on the boat# which stated that p,mping bilges into the water was illegal! 7he dec"hand con-irmed with the U!S! %oast (,ard that the practice was illegal! 7he dec"hand re-,sed to p,mp the bilges and was -ired! 3e s,ed -or wrong-,l discharge and pre*ailed beca,se the co,rt ,pheld the p,blic policy doctrine that pre*ents the termination o- at-will employees -or re-,sing to per-orm illegal acts! 7he dec"hand abo*e pre*ailed# b,t many others ha*en1t been as -ort,nate! &lorida t,gboat captain# -or e=ample# was -ired a-ter he re-,sed to ma"e an 1D-ho,r trip in contra*ention to the -ederal sa-ety reg,lations! 7he captain lost in co,rt# e*en tho,gh the &lorida whistle-blower law states that employers can1t retaliate against employees -or re-,sing to participate in ,nlaw-,l acti*ities! 'mployees s,ch as the t,gboat captain might manage to a*oid brea"ing the law# b,t they may ha*e to sacri-ice their :obs to do so! I"PLICATIONS
7he re*iew o- this sample o- cases helps pro*ide some important insights into act,al whistleblowing incidents! 7he re*iew shows that e*en when well-intentioned employees -eel they1re doing the right thing by reporting acts o- wrongdoing# their reports aren1t always well recei*ed! 7he -indings also s,ggest that employees who witness acts o- wrongdoing sho,ld see" legal co,nsel be-ore acting! 7he cases didn1t in*ol*e any whistle-blowers who also happened to be %&'s# b,t %&'s might r,n into the same types o- problems! %&'s sho,ld learn when# where# and how to report -ra,d,lent acts be-ore they blow the whistle# so they can comply with the proced,res re8,ired to recei*e protection! 7his re*iew loo"ed at only a sample o- the state-le*el cases -iled against employers -or retaliation! B,t it does highlight the -act that whistle-blower cases can be di--ic,lt to pro*e# and it1s best that all in*ol*ed 5incl,ding %&'s6 sho,ld be "nowledgeable abo,t the laws in*ol*ed and see" legal g,idance early! Patricia A. Patrick, PhD, CFE, CPA, C F!, is associate pro"essor o" accounting at the #hippens$urg %niversit& o" Penns&lvania, 'here she teaches auditing and "orensic accounting. #he’s a recipient o" the ACFE’s ())) *al+er A'ard "or attaining the second highest score on the CFE E,amination that &ear. $eciding Where to &ile I Su%3e4t "atter 5urisdi4tio) 6 %o,rts m,st ha*e power to hear the "ind o- iss,e in yo,r s,it! S,b:ect matter :,risdiction is based on the law yo, plan to ,se! (enerally spea"ing# -ederal co,rts hear *iolations o- -ederal laws and state co,rts hear *iolations o- state laws# altho,gh this isn1t always the case! 'mployees can -ile alleged *iolations o- their ci*il rights in state or -ederal co,rts ,nder Section 1?DC o- 7itle @2 o- the U!S! %ode o- &ederal 4eg,lations! While rarely ,sed in the past# today Section 1?DC is part o- the %i*il 4ights ct and the primary means o- en-orcing all %onstit,tional rights! S,b:ect )atter <,risdiction can help employees decide to -ile in -ederal or state co,rt! O- co,rse# the employer might as" to ha*e the case mo*ed to another co,rt! I Perso)al 5urisdi4tio) 6 )a"e s,re the co,rt has power o*er the party yo, want to s,e! co,rt m,st ha*e personal :,risdiction o*er the de-endant to hear a case! %o,rts ,s,ally ha*e personal :,risdiction o*er the people and organi>ations residing or doing b,siness in their :,risdiction! I +e)ue 6 Jen,e re-ers to the co,rt that will hear yo,r case! 7he proper *en,e is the :,risdiction in which the de-endant li*es or does b,siness# the contract was signed or carried o,t# or the incident too" place! )ore than one co,rt can ha*e :,risdiction o*er yo,r case! Pic" the *en,e most con*enient -or yo,! Gnow the &acts be-ore .o, Blow the Whistle n Ohio prosec,tor gathered payroll records that he belie*ed pro*ed his co-wor"ers were o*erstating their wages! 7he attorney reported the allegations to the local police department and was s,bse8,ently -ired!
When the case went to trial# the attorney was denied whistle-blower protection beca,se he -ailed to in*estigate his s,spicions! 7he co,rt said that had he made reasonable internal in8,iries be-ore reporting his s,spicions e=ternally# he wo,ld ha*e learned that his co-wor"ers weren1t committing payroll -ra,d and he wo,ldn1t ha*e reported e=ternally! 7he prosec,tor was denied protection ,nder Ohio1s whistle-blower law beca,se the law speci-ically states that employees m,st ma"e good -aith e--orts to determine the acc,racy o- the in-ormation they are reporting# and a -ail,re to ma"e s,ch an e--ort co,ld lead to disciplinary action# incl,ding termination! $oing the 4ight 7hing %an (et .o, &ired scientist in charge o- en*ironmental health -or a large U!S! oil re-inery in 0ew <ersey learned his employer was s,pplying <apan with gasoline containing dangero,sly high le*els o- ben>ene# a carcinogen in gasoline! 3e told some <apanese managers abo,t this at an ind,stry con-erence in <apan! 7he <apanese managers said they co,ldn1t red,ce the ben>ene beca,se it was too e=pensi*e! 7he scientist "new that <apan didn1t re8,ire warning labels# ,se *apor containment systems# or catalytic con*erters! 3e also "new that 0ew <ersey1s state laws and international treaties prohibited the mar"eting o- gasoline with ,nsa-e le*els o- ben>ene! 7he scientist ad*ised the <apanese managers to stop ,sing the gasoline ,ntil it co,ld red,ce the ben>ene! When the scientist ret,rned -rom <apan# he was immediately restricted -rom his employer1s premises and gi*en an Ainde-inite special assignment!B 7wo wee"s later# he was terminated! 7he scientist s,ed ,nder 0ew <ersey1s %onscientio,s 'mployee Protection ct and was awarded H2!+ million in compensatory damages# HDE+#000 -or emotional distress# and HC!+ million in p,niti*e damages# despite his employer1s alleged ,nawareness o- the scientist1s comments at the con-erence!
Protection Under State Whistle-blowing Laws
September/October 2010 By Patricia ! Patric"# Ph!$!# %&'# %P # %(&) + o,t o- +
*erage
.o, might one day need to be a whistle-blower! Be -orewarned/ .o,r personal and pro-essional li*es will s,--er! 0ew research on state whistle-blower laws,its shows it1s li"ely yo,1ll be -ired and will lose yo,r case! B,t then# doing the right thing ne*er meant that right things wo,ld happen to yo,! 2magine this scenario/ go*ernment contractor is o*ercharging yo,r state go*ernment agency -or goods and ser*ices! .o, "now this beca,se yo, once wor"ed in the billing department o- the contractor! .o, report this to yo,r s,per*isor who terminates yo, shortly a-terward! So# yo, -ile a complaint with the &lorida %ommission on 3,man 4elations 5&%346# which reinstates yo, to yo,r position! .o,r -ormer employer ta"es the matter to co,rt ,nder &lorida1s whistle-blowing law and has yo, remo*ed again! 7he co,rt o*ert,rns the &%341s decision beca,se the whistleblower law re8,ires a complainant to -ile within 90 days o- the alleged incident and yo, -iled more than 100 days later! lso# the &%34 didn1t ha*e :,risdiction to hear yo,r case! Once again# yo,1re o,t o- a :ob! )y sample o- state-le*el cases shows that o,tcomes s,ch as this aren1t ,n,s,al in whistle-blower cases -iled in merican states! Wo,ld-be whistle-blowers might wonder i- it1s worth it# yet many contin,e to report
wrongdoing! )ost recently# my Sto,pe# %&'# the 2010 %&' Sentinel ward recipient# blew the whistle! Others who did the right thing incl,de %ynthia %ooper# %&'; Sherron Wat"ins; Pamela )eyer $a*is; B,nny (reenho,se; )arta ndreasen; $r! $a*id <! (raham; and William San:o,r! Oco,rse# all paid a high price to come -orward! s %&'s# we might -ind it necessary to report wrongdoing# b,t we sho,ld proceed with ca,tion be-ore blowing the whistle! )y re*iew o- state-le*el laws,its s,ggests that being entitled to protection ,nder a state whistle-blower stat,te and recei*ing that protection can be two di--erent matters! (This article isn’t meant to replace legal advice. Please consult local counsel. – ed.) STATE WHISTLE-BLOWING LAWS ll the U!S! states ha*e laws to protect p,blic employees -rom retaliation! )ost o- the state whistle-blowing laws were enacted to enco,rage p,blic employees to report -ra,d# waste# and ab,se in go*ernment agencies! Some laws protect only p,blic employees; others incl,de go*ernment contractors and pri*ate-sector employees! )ost o- the states also ha*e laws co*ering pri*ate-sector employees! 3owe*er# many o- these laws protect reports in*ol*ing wor"place sa-ety! 7hey were enacted decades ago to protect employees -rom retaliation when reporting occ,pational sa-ety iss,es! P,blic and pri*ate employees can ,se them# b,t they might not apply to all sit,ations! O*er the years# reporting in other speci-ic sit,ations has been protected! )any states enacted anti-retaliation cla,ses -or speci-ic claims or ind,stries! &or e=ample# 4hode 2sland has anti-retaliation cla,ses in stat,tes pertaining to gaming# n,rsing homes# health-care -acilities# nonpro-it hospitals# ins,rance -ra,d# health maintenance organi>ations; and asbestos abatement! nti-retaliation cla,ses are designed to protect p,blic and pri*ate employees wor"ing in speci-ic cases! THE ESSENCE O BLOWING THAT WHISTLE Whistle-blowing# as it relates to -ra,d# is the act o- reporting -ra,d# waste# and ab,se! 4eporting any act o- wrongdoing is considered whistle-blowing# regardless i- it1s reported by a p,blic or pri*ate employee or to persons inside or o,tside o- the *ictim organi>ation! nyone can report wrongdoing# b,t the le*el o- protection an employee will recei*e will di--er depending on whether they1re p,blic or pri*ate# to whom they report# the manner in which they report# the type o- wrongdoing they report# and the law ,nder which they report! 7a"e the 7e=as Whistle-blower ct# -or e=ample! 2t protects p,blic employees -rom retaliation who report *iolations o- law to appropriate law en-orcement agencies# pro*iding the employee -iles a grie*ance within ?0 days o- when the employer1s ad*erse employment action occ,rred or
was disco*ered by the employee! 7he employee m,st initiate action ,nder the grie*ance or appeal process o- the go*ernmental employer be-ore -iling a laws,it! 7he employee m,st also report the *iolation in good -aith# pro*e the retaliation is the res,lt o- the whistle-blowing# and identi-y the laws *iolated and the persons engaged in the *iolations! 'mployees can be compensated -or their losses# b,t the entity can de-end itsel- by asserting its actions were ,nrelated to the whistle-blowing! 7his is an a--irmati*e de-ense that can be asserted by any employer! 'mployers ,sing an a--irmati*e de-ense will admit they too" the ad*erse personnel action b,t claim the action was d,e to e*ents independent o- the whistle-blowing! 2- yo, -ind 7e=as1 Whistle-blowing Law da,nting# yo,1re probably not alone! )y re*iew ostate-le*el laws,its -iled by whistle-blowers shows that it1s di--ic,lt to recei*e protection ,nder many o- the state laws! !ESEA!CH "ETHO# 2 selected a random sample o- laws,its -rom the statewide cases reported in the Le=is0e=is database between 1??@ and 200?! 2 "eyed in the search term Awhistle-blowerB and -o,nd CD0 cases in*ol*ing whistle-blowers who s,ed their employers -or alleged retaliation -ollowing the reporting o- a wrong-,l act! 2 strati-ied the laws,its chronologically by state and selected e*ery -o,rth case to obtain a random sample o- ?+ cases! 2 cond,cted a content analysis o- each case to identi-y/ 16 the type oretaliation ta"en against the whistle-blower 26 the type o- wrongdoing reported C6 the p,blic policy iss,ed @6 the o,tcome -or the whistle-blower +6 the reason the whistle-blower won/lost the laws,it 96 whether the whistle-blower was a p,blic ser*ant E6 the law ,sed to -ile the case! "OST WHISTLE-BLOWE!S A!E I!E# Se*enty--o,r percent o- the whistle-blowers in my re*iew were terminated! nother 9 percent were s,spended and + percent were trans-erred against their wishes! 7he remaining 1+ percent were gi*en poor e*al,ations# demoted or harassed! 7he res,lts# s,mmari>ed in E$hi%it & '%elow(# indicate that retaliation occ,rs# altho,gh this re*iew can1t determine how o-ten!
ppro=imately 90 percent o- the laws,its were -iled in the past 10 years; howe*er# it1s impossible to say why employees are increasingly t,rning to the co,rts to sol*e their problems! Perhaps employees are reporting wrong-,l acts more -re8,ently and -iling more -ri*olo,s laws,its! 2t1s also possible that employers are committing more acts owrongdoing and retaliating more o-ten! 7hen again# it1s possible the rise is d,e to the increasingly litigio,s nat,re o- merican society!
7he whistle-blowers in this sample didn1t -are well in their laws,its! &i-ty--i*e percent lost their cases! &o,rteen percent lost beca,se they -ailed to pro*e their cases! 'le*en percent -ailed to pro*e a ca,sal connection between the alleged retaliation and the whistle-blowing! Only 22 percent won their laws,its! O- these# 2 percent were reinstated to their old :obs and D percent won damage awards! 7he remaining 2C percent o- the cases were remanded -or a new trial! 7o pre*ail# employees will probably ha*e to lin" their whistle-blowing to the retaliation! 7his can be di--ic,lt -or employees ha*ing problems in the wor"place beca,se employers will claim their ad*erse personnel actions were based on the employees1 poor per-ormances F not the employees1 decisions to blow the whistle! 2t1s especially easy -or employers to assert this claim ithe person who cond,cted the retaliation claims no "nowledge o- the whistle-blowing! GET TECHNICALITIES CO!!ECT 7wenty-two percent o- the whistle-blowers lost beca,se they didn1t comply with some technicality in the laws! s disc,ssed pre*io,sly# the laws are *ery speci-ic on how whistleblowers m,st report the wrongdoing! &ailing to comply with any aspect o- the law will res,lt in a loss o- protection! Si= percent o- the employees lost beca,se they -ailed to e=ha,st all their internal remedies be-ore reporting their concerns e=ternally! )any laws re8,ire the employee to report internally -irst to gi*e the employer an opport,nity to correct the matter! 7his minimi>es the potentially de*astating impact that p,blic reports can ha*e on organi>ations when the claims don1t ha*e merit or co,ld be handled more e--ecti*ely internally! 2nternal reports can also allow the employer to conceal the ,nlaw-,l acti*ity# i- they are so inclined! nother + percent lost beca,se they -ailed to report the act o- wrongdoing correctly! Some laws re8,ire the witness to report the wrongdoing in writing within a certain period o- time a-ter it1s disco*ered! Other laws re8,ire the whistle-blower to state the speci-ic laws that were bro"en! 7he p,rpose o- these re8,irements is to pro*ide the employer with speci-icity so it can correct the problem! Case i) poi)t* high-le*el o--icer# wor"ing -or a go*ernment de-ense contractor# disco*ered that his employer was o*erbilling the go*ernment# s,pplying de-ecti*e parts# and engaging in the ,na,thori>ed ,se o- go*ernment e8,ipment! 3e re-,sed to participate in the acti*ities and reported them to his employer1s go*ernment liaison o--icer only to -ind himsel- terminated a-terward! 3e s,ed ,nder &lorida1s whistle-blower law and lost beca,se he -ailed to -irst in-orm his employer o- the alleged acti*ity in writing! &i*e percent o- the employees in the sample lost beca,se they -iled their laws,its ,sing inappropriate laws! %hoosing an appropriate law so,nds easy# b,t that isn1t always the case! Case i) poi)t* -light engineer# wor"ing -or a &lorida-based airline and also li*ing in the state# was terminated a-ter he insisted on delaying a -light at 0ew .or"1s <ohn &! Gennedy irport to
repair the plane1s hydra,lic system! 3e -iled his s,it in a &lorida co,rt ,nder a 0ew .or" State labor law beca,se# at that time# &lorida didn1t ha*e a whistle-blower law! 7he co,rt dismissed his complaint and the engineer appealed! 2n the meantime# &lorida enacted a whistle-blower law and it co*ered pri*ate-sector employees! 7he case went all the way to the &lorida S,preme %o,rt# b,t the engineer lost beca,se &lorida1s whistle-blower law didn1t apply retroacti*ely! P!I+ATE-SECTO! E"PLOYEES HA+E IT TO,GH )ost whistle-blower laws are intended to protect p,blic-sector employees who report *iolations a--ecting p,blic health and sa-ety! Pro*ing p,blic interest is easy -or p,blic-sector employees beca,se their wor" in*ol*es p,blic protection! 2t1s not as easy -or pri*ate-sector employees! 'le*en percent o- the pri*ate-sector whistle-blowers in the sample lost their cases beca,se the matters didn1t in*ol*e p,blic policy! 7he case o- two n,rses wor"ing in a pri*ate n,rsing home e=empli-ies the di--ic,lties pri*ate-sector employees can ha*e winning in co,rt e*en when their cases appear to in*ol*e p,blic interest! Case i) poi)t* hospital -ired one o- its therapists si= days a-ter he told representati*es -rom an accrediting organi>ation d,ring a site *isit that the hospital1s therapists completed patient charts sometime d,ring their shi-ts rather than immediately a-ter treating patients as re8,ired by the accrediting organi>ation! 7he therapist# who had wor"ed -or the hospital -or 2C years# s,ed -or retaliation and lost beca,se he co,ldn1t con*ince the co,rts that charting was a matter o- p,blic policy! 7he therapist arg,ed that the 2llinois )edical Patient1s 4ights ct gi*es patients the right to so,nd and consistent care# and -ailing to immediately chart :eopardi>es patient care! 7he co,rt said it wasn1t eno,gh to claim a broad or generali>ed p,blic policy! 7o pre*ail# the therapist needed to show how a lac" o- immediate charting *iolates an 2llinois state law# and the therapist wasn1t able to -ind an 2llinois law that re8,ires immediate charting! Only the co,rts can decide whether an iss,e is a matter o- p,blic policy# and this co,rt wasn1t willing to -ind it so! &i*e percent o- the pri*ate-sector employees in this sample lost beca,se they mista"enly -iled charges ,nder stat,tes that co*ered only p,blic employees! 0ot all the laws protect pri*ate-sector employees! Whistle-blowers need to ma"e s,re they are co*ered by the laws they ,se! WHISTLE-BLOWE!S T!Y TO P!OTECT P,BLIC INTE!EST 'ighty--i*e percent o- the cases in*ol*ed iss,es o- p,blic health# sa-ety# or interest! 7wenty--i*e percent in*ol*ed p,blic sa-ety! &i-teen percent in*ol*ed p,blic health! Si=teen percent in*ol*ed the misappropriation o- p,blic -,nds! 'ighteen percent in*ol*ed matters o- general p,blic interest# and 11 percent in*ol*ed ci*il rights *iolations! P,blic employees -iled 90 percent o- the cases in the sample# and they tended to witness the most serio,s *iolations o- p,blic policy! P,blic engineers reported the most serio,s o--enses! 7hese incidents ,s,ally in*ol*ed p,blic e=pos,re to to=ic chemicals or waste! P,blic n,rses also
reported serio,s iss,es! 7heir complaints ,s,ally in*ol*ed patient neglect and -atal accidents! 7he complaints o- police o--icers were also *ery serio,s and ,s,ally in*ol*ed internal corr,ption!
$amage awards were o-ten gi*en to whistle-blowers who reported serio,s p,blic policy iss,es! n analyst in a %ali-ornia p,blic ho,sing a,thority# -or e=ample# reported that someone was lea"ing con-idential bid in-ormation! 7he whistleblower was -ired# b,t was awarded a H1!C million damage award in co,rt! 2n Pennsyl*ania# a ho,sing a,thority employee reported sel--dealing and recei*ed a H?00#000 damage award -or being terminated! 7hese awards were gi*en to whistleblowers reporting irreg,larities in*ol*ing p,blic -,nds! Large awards were also gi*en to whistle-blowers reporting *iolations o- p,blic health and sa-ety! %onnectic,t water treatment plant engineer was terminated a-ter reporting plant managers -or concealing that the town1s water s,pply was inade8,ately treated! 7he co,rt awarded the engineer H12E#000 -or lost wages! 7hese awards s,pport the assertion that whistle-blowers are p,blic employees attempting to resol*e serio,s *iolations o- p,blic policy! 7he *iolations# s,mmari>ed in E$hi%it - 'a%o.e(# show that 1+ percent o- the employees acc,sed their employers o- iss,ing -alse reports! &o,rteen percent alleged *iolations in*ol*ing air or water 8,ality! 7en percent alleged nepotism or sel--dealing! 0ine percent alleged patient ab,se or neglect! 0ine percent alleged discrimination or ci*il rights *iolations! 'ight percent alleged miscellaneo,s *iolations and another eight percent alleged *iolations o- state labor laws or wor"place sa-ety!
THE LAWS ,SE# BY WHISTLE-BLOWE!S '=amining the laws whistle-blowers ,se to see" protection can pro*ide insights into why they o-ten lost their cases! Si=ty-one percent o- the whistle-blowers s,ed ,sing a state whistle-blower law! 7wel*e percent ,sed an anti-retaliation cla,se in a labor law! 'ight percent s,ed ,nder contract law# and + percent s,ed ,nder the U!S! %onstit,tion or other ci*il rights law! &i*e percent began by ha*ing their cases heard in a ci*il ser*ice or ,nion hearing# and 2 percent s,ed to appeal a pro-essional code o- cond,ct *iolation! 7he remaining E percent -iled ,nder a miscellaneo,s law! 7he laws are s,mmari>ed in E$hi%it / '%elow(!
Si=ty--o,r percent o- the whistle-blowers who s,ed ,sing a labor or employment law lost# despite the -act that they barely blew the whistle! 2n most o- these cases# the employees were terminated shortly a-ter beginning their in8,iries# b,t they didn1t lose -or ma"ing ,ns,bstantiated allegations! 7hey lost beca,se the matters in their cases weren1t o- p,blic interest! Case i) poi)t* n a,ditor# wor"ing -or a 0ew .or" %ity bro"erage -irm# reported that corporate o--icers were engaged in money la,ndering! 7he -irm terminated him# e*en tho,gh the -irm1s policy man,al speci-ically prohibited retaliation against employees engaged in in*estigations! 3e -iled a complaint with the 0ew .or" Stoc" '=change and recei*ed compensatory damages in arbitration! 3e then -iled a laws,it ,nder a labor law to see" p,niti*e damages! 7he a,ditor lost beca,se p,niti*e damages are awarded only when the perpetrator engages in a pattern o- cond,ct aimed at the p,blic in general! 7he whistle-blower in this case wasn1t able to pro*e s,--icient p,blic interest! 7he whistle-blowers in the sample who s,ed ,nder contract law were independent contractors! 7hey s,ed -or breach o- contract when they were terminated prior to the end o- their employment contracts and lost when they -ailed to pro*e the ca,sal lin" between their termination and whistle-blowing! Some o- the co,rts allowed the employers to terminate these employees Aat willB despite their employment contracts! Case i) Poi)t* 7he most interesting contract law case was -iled by mechanics o- a chemical company! 7hey told the Occ,pational Sa-ety and 3ealth dministration 5OS3 6 that their employer e=posed the chemical plant shop to asbestos# and then they were terminated! 7he employees co,ld ha*e -iled a claim ,nder OS3 # the 7e=as whistle-blowing law# or contract law! 7hey decided to s,e -or breach o- contract beca,se ,nder contract law they only had to pro*e/ 16 that they had an employment agreement 26 the employer inter-ered with that agreement and C6 the employer1s inter-erence res,lted in damages! 7he mechanics pro*ed their case and were awarded compensatory damages -or lost wages! 2t wasn1t clear -rom the case# b,t it1s li"ely they also were reinstated to their positions! Some o- the whistle-blowers s,ed to protect their rights to -ree speech ,nder the &irst
mendment o- the U!S! %onstit,tion! 7hese employees claimed the employer1s retaliation was a *iolation o- their right to -ree speech! 7o pre*ail# these whistle-blowers had to pro*e the iss,e was a matter o- p,blic interest! 7hat wasn1t always easy! Utah -ire-ighter# -or e=ample# claimed that his department1s new protocol -or handling wild-ires was ,nsa-e! 7he co,rt loo"ed to whether the employer1s interest in promoting e--iciency o,tweighed the employee1s right to *oice p,blic concerns and decided that the manner in which the -ire-ighter *oiced his concerns ,ndermined e--iciency and morale! 7he -ire-ighter had secretly tape-recorded con*ersations with co-wor"ers and :,mped the chain o- command! 7he co,rt held that the -ire-ighter had carried his concerns to protect the p,blic too -ar! 2n another &irst mendment case# a 0ebras"a prison g,ard told a reporter abo,t the serio,s racial problems in his prison! 7he g,ard was terminated# despite the -act that he had permission to participate in the inter*iew! Prison o--icials claimed the g,ard o*erstepped his a,thority to spea" in the inter*iew and that his speech disr,pted prison e--iciency! 7he co,rt held that racial problems are a matter o- p,blic interest and o,tweigh any harm-,l e--ects to prison e--iciency or morale! 7he g,ard was reinstated and awarded attorney1s -ees! )ost o- the whistle-blowers who began their complaints with ci*il ser*ice or ,nion hearings were police o--icers# alleging harassment a-ter reporting internal corr,ption! 7he o--icers lost at hearing and s,ed to appeal those decisions! )ost o- the o--icers were assigned to tas" -orces charged with in*estigating internal corr,ption! 7hey were harassed when the in*estigations led to -indings o- internal corr,ption! ll b,t one lost on appeal beca,se a higher co,rt won1t o*ert,rn a lower co,rt1s decision ,nless it1s arbitrary and capricio,s! 7he only o--icer to pre*ail demonstrated a long pattern o- harassment# which led to his complete mental and physical brea"down! ltho,gh the o--icers ,s,ally lost p,rs,ing this co,rse o- action# as ci*il ser*ants they li"ely were re8,ired to begin with ci*il ser*ice or ,nion grie*ances!
)ost o- the employees who s,ed to appeal decisions that their whistle-blowing *iolated pro-essional codes o- cond,ct lost when the codes re8,ired the pro-essionals to maintain client con-identiality! 7he whistle-blowers arg,ed that employers aren1t clients# and the codes don1t re8,ire employee-employer con-identiality! 7he co,rts still held these employees to a higher standard o- con-identiality! So -ar# the co,rts ha*e applied this standard to attorneys# b,t other pro-essionals with con-identiality cla,ses in their codes o- cond,ct# s,ch as acco,ntants# co,ld be
held to this standard as well! )ost o- the whistle-blowers in the re*iew lost their laws,its! E$hi%it 0 'a%o.e( shows that ++ percent o- the whistle-blowers -iling ,nder a state whistle-blower stat,te lost their cases! Si=ty-o,r percent -iling ,nder a labor law lost# as did 90 percent o- those -iling ,nder the U!S! %onstit,tion or ci*il ser*ice agreement! 3al- o- the employees appealing a *iolation o- a pro-essional code o- cond,ct lost! 7his re*iew co,ldn1t determine why the whistle-blowers ,sed the wrong laws or -iled in inappropriate co,rts! 2t1s clear that many o- the whistle-blowers co,ld ha*e been more s,ccess-,l i- they had been smarter abo,t what and where to -ile! Se*eral -actors play a role in deciding ,nder what law and in which co,rt to -ile! 7hese are iss,es o- :,risdiction and *en,e and are disc,ssed in A$eciding Where to &ileB below! !ESEA!CH THE #ETAILS Whistle-blowers can impro*e their chances o- s,ccess by preparing early and reading the whistle-blowing laws! 7he case law is also important beca,se it shows the precedent already set by the co,rts! 7he better prepared yo, are# the less li"ely yo,1ll ma"e a*oidable mista"es! Case i) poi)t* One whistle-blower made a -atal mista"e when he -iled charges against the indi*id,als who committed the wrongdoing rather than his employer! 3ad he researched the law# he wo,ld ha*e "nown that the term Aemployers#B as ,sed in the )assach,setts1 law that reads Aan employer shall not ta"e retaliatory action against an employe !!!B means the commonwealth and its agencies or political s,bdi*ision! 7here-ore# ,nder the law# the allegations had to be lodged against the employer# rather than the indi*id,al o--enders! Un-ort,nately# he -iled against the o--ending employees and lost his case! nother whistle-blower lost beca,se he -iled claims in two *en,es only to learn later that see"ing protection ,nder one stat,te precl,ded protection ,nder another stat,te! 7his whistle-blower -iled a claim alleging retaliatory discharge ,nder the )innesota Whistle-blower ct and a claim oreprisal discrimination ,nder the )innesota 3,man 4ights ct 5)34 6! 7he whistle-blower presented the claims in co,rt and recei*ed -a*orable decisions on both claims! 7he employer appealed and the S,preme %o,rt decided that the e=cl,si*ity cla,se in the )34 barred the -iling o- any other claims on the matter! n Ohio g,idance co,nselor lost beca,se she -ailed to pro*e that she s,--ered damages -rom the retaliation! 7he Ohio law states that a claim o- retaliation can be bro,ght only where the employee s,--ers a direct monetary loss! 7he Ohio whistle-blower didn1t s,--er a -inancial loss beca,se e*ery time the school district assigned her to a distant wor" location# she complained and was reassigned closer to home! n e*ol*ing iss,e is the e=tent to which whistle-blowers m,st be certain o- *iolations! )any laws already re8,ire the employee to state the speci-ic law that was bro"en! Some co,rts re8,ire whistle-blowers to be certain o- their allegations! 7rends re8,iring certainty will ma"e it
increasingly di--ic,lt -or whistle-blowers to recei*e protection! 5See AGnow the &acts be-ore yo, Blow the WhistleB below!6 #ON1T GET CA,GHT WITH ,NCLEAN HAN#S2 &i*e percent o- the whistle-blowers -ailed to recei*e protection beca,se o- their improper cond,ct! Some o- these whistle-blowers mis,sed their employers1 property; some o- them stole it! 'mployees m,st ens,re their cond,ct is abo*e scr,tiny beca,se some co,rts will apply the Adoctrine o- ,nclean handsB and bar whistle-blowers -rom protection# i- they1*e engaged in miscond,ct directly related to their complaints! Case i) poi)t* %ali-ornia 8,ality ass,rance manager secretly copied con-idential patient records to pro*e that a near--atal incident was ca,sed by h,man error a-ter her hospital-employer appeared to be dodging an in*estigation! 7he manager p,rs,ed an in*estigation and was -ired a -ew wee"s later! 7he manager s,ed -or wrong-,l termination and barely pre*ailed! 7he lower co,rt applied the doctrine o- ,nclean hands and r,led in -a*or o- the hospital! 7he manager appealed! 7he appeals co,rt didn1t dismiss the case b,t signi-icantly limited what the employee co,ld reco*er beca,se o- her ,nclean hands! 7he doctrine o- ,nclean hands can wor" against employers# :,st as it does employees! 2n 2001# a &lorida health-care agency s,bmitted doc,ments containing incorrect in-ormation to the co,rt! 7he whistle-blower pro*ed the in-ormation was -alse and won her case on those gro,nds alone! 7h,s# it1s important -or employers and employees to comport themsel*es with integrity! Whistle-blowers who commit ,nlaw-,l acts to ad*ance their cases don1t do well in co,rt# b,t neither do whistle-blowers who re-,se to commit ,nlaw-,l acts on behal- o- their employers! )ost state whistle-blower laws are designed to protect employees that re-,se to commit ,nlaw-,l acts# b,t it can be di--ic,lt to recei*e that protection! Case i) poi)t* 7e=as dec"hand was as"ed to p,mp the bilges o- the boat into the water# despite a placard on the boat# which stated that p,mping bilges into the water was illegal! 7he dec"hand con-irmed with the U!S! %oast (,ard that the practice was illegal! 7he dec"hand re-,sed to p,mp the bilges and was -ired! 3e s,ed -or wrong-,l discharge and pre*ailed beca,se the co,rt ,pheld the p,blic policy doctrine that pre*ents the termination o- at-will employees -or re-,sing to per-orm illegal acts! 7he dec"hand abo*e pre*ailed# b,t many others ha*en1t been as -ort,nate! &lorida t,gboat captain# -or e=ample# was -ired a-ter he re-,sed to ma"e an 1D-ho,r trip in contra*ention to the -ederal sa-ety reg,lations! 7he captain lost in co,rt# e*en tho,gh the &lorida whistle-blower law states that employers can1t retaliate against employees -or re-,sing to participate in ,nlaw-,l acti*ities! 'mployees s,ch as the t,gboat captain might manage to a*oid brea"ing the law# b,t they may ha*e to sacri-ice their :obs to do so! I"PLICATIONS
7he re*iew o- this sample o- cases helps pro*ide some important insights into act,al whistleblowing incidents! 7he re*iew shows that e*en when well-intentioned employees -eel they1re doing the right thing by reporting acts o- wrongdoing# their reports aren1t always well recei*ed! 7he -indings also s,ggest that employees who witness acts o- wrongdoing sho,ld see" legal co,nsel be-ore acting! 7he cases didn1t in*ol*e any whistle-blowers who also happened to be %&'s# b,t %&'s might r,n into the same types o- problems! %&'s sho,ld learn when# where# and how to report -ra,d,lent acts be-ore they blow the whistle# so they can comply with the proced,res re8,ired to recei*e protection! 7his re*iew loo"ed at only a sample o- the state-le*el cases -iled against employers -or retaliation! B,t it does highlight the -act that whistle-blower cases can be di--ic,lt to pro*e# and it1s best that all in*ol*ed 5incl,ding %&'s6 sho,ld be "nowledgeable abo,t the laws in*ol*ed and see" legal g,idance early! Patricia A. Patrick, PhD, CFE, CPA, C F!, is associate pro"essor o" accounting at the #hippens$urg %niversit& o" Penns&lvania, 'here she teaches auditing and "orensic accounting. #he’s a recipient o" the ACFE’s ())) *al+er A'ard "or attaining the second highest score on the CFE E,amination that &ear. $eciding Where to &ile I Su%3e4t "atter 5urisdi4tio) 6 %o,rts m,st ha*e power to hear the "ind o- iss,e in yo,r s,it! S,b:ect matter :,risdiction is based on the law yo, plan to ,se! (enerally spea"ing# -ederal co,rts hear *iolations o- -ederal laws and state co,rts hear *iolations o- state laws# altho,gh this isn1t always the case! 'mployees can -ile alleged *iolations o- their ci*il rights in state or -ederal co,rts ,nder Section 1?DC o- 7itle @2 o- the U!S! %ode o- &ederal 4eg,lations! While rarely ,sed in the past# today Section 1?DC is part o- the %i*il 4ights ct and the primary means o- en-orcing all %onstit,tional rights! S,b:ect )atter <,risdiction can help employees decide to -ile in -ederal or state co,rt! O- co,rse# the employer might as" to ha*e the case mo*ed to another co,rt! I Perso)al 5urisdi4tio) 6 )a"e s,re the co,rt has power o*er the party yo, want to s,e! co,rt m,st ha*e personal :,risdiction o*er the de-endant to hear a case! %o,rts ,s,ally ha*e personal :,risdiction o*er the people and organi>ations residing or doing b,siness in their :,risdiction! I +e)ue 6 Jen,e re-ers to the co,rt that will hear yo,r case! 7he proper *en,e is the :,risdiction in which the de-endant li*es or does b,siness# the contract was signed or carried o,t# or the incident too" place! )ore than one co,rt can ha*e :,risdiction o*er yo,r case! Pic" the *en,e most con*enient -or yo,! Gnow the &acts be-ore .o, Blow the Whistle n Ohio prosec,tor gathered payroll records that he belie*ed pro*ed his co-wor"ers were o*erstating their wages! 7he attorney reported the allegations to the local police department and was s,bse8,ently -ired!
When the case went to trial# the attorney was denied whistle-blower protection beca,se he -ailed to in*estigate his s,spicions! 7he co,rt said that had he made reasonable internal in8,iries be-ore reporting his s,spicions e=ternally# he wo,ld ha*e learned that his co-wor"ers weren1t committing payroll -ra,d and he wo,ldn1t ha*e reported e=ternally! 7he prosec,tor was denied protection ,nder Ohio1s whistle-blower law beca,se the law speci-ically states that employees m,st ma"e good -aith e--orts to determine the acc,racy o- the in-ormation they are reporting# and a -ail,re to ma"e s,ch an e--ort co,ld lead to disciplinary action# incl,ding termination! $oing the 4ight 7hing %an (et .o, &ired scientist in charge o- en*ironmental health -or a large U!S! oil re-inery in 0ew <ersey learned his employer was s,pplying <apan with gasoline containing dangero,sly high le*els o- ben>ene# a carcinogen in gasoline! 3e told some <apanese managers abo,t this at an ind,stry con-erence in <apan! 7he <apanese managers said they co,ldn1t red,ce the ben>ene beca,se it was too e=pensi*e! 7he scientist "new that <apan didn1t re8,ire warning labels# ,se *apor containment systems# or catalytic con*erters! 3e also "new that 0ew <ersey1s state laws and international treaties prohibited the mar"eting o- gasoline with ,nsa-e le*els o- ben>ene! 7he scientist ad*ised the <apanese managers to stop ,sing the gasoline ,ntil it co,ld red,ce the ben>ene! When the scientist ret,rned -rom <apan# he was immediately restricted -rom his employer1s premises and gi*en an Ainde-inite special assignment!B 7wo wee"s later# he was terminated! 7he scientist s,ed ,nder 0ew <ersey1s %onscientio,s 'mployee Protection ct and was awarded H2!+ million in compensatory damages# HDE+#000 -or emotional distress# and HC!+ million in p,niti*e damages# despite his employer1s alleged ,nawareness o- the scientist1s comments at the con-erence!
