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Is a worker who blows the whistle on purported illegal activities or dangerous work conditions a savior or a troublemaker? That depends on how management views such disclosures.
Managers in some workplaces may opt to turn a deaf ear, trivializing the whistle-blower’s concerns, threatening him to keep him quiet or even firing him in an effort to shut him up. Retaliation is illegal under state and federal law, but it does occur. Last year, a California jury awarded a Napa state hospital psychologist $1 million for retaliation she suffered after reporting wrongdoing. An appeal is pending.
On the other end of the spectrum are companies that thoroughly explore whistle-blowers’ concerns. Their HR professionals are committed to ensuring that allegations are taken seriously and investigated. These businesses earn the respect and loyalty of their workforce as they foster an ethical and productive workplace.
California’s extensive protections for whistle-blowers extend beyond what many other states and the federal government provide. “California’s [law] is as broad as it can be,” said Kevin Whittaker, a partner in the labor and employment practice of Reed Smith’s San Francisco office. “California is a very employee-friendly state, the friendliest in the country.”
The Golden State’s whistle-blower law dates to 1984, when lawmakers amended the California Labor Code to forbid employers from retaliating against workers for reporting violations of state or federal law to a government or law enforcement agency. Violators can be hit with penalties of as much as $10,000 per violation plus back pay, reinstatement of benefits and position, and damages.
Protections for whistle-blowers again expanded Jan. 1, 2014, to include workers who report violations to their managers and in-house authorities and to outside bodies. The law also bars retaliation when an employer believes the worker has disclosed or may disclose information either internally or to an external agency or watchdog hotline—an extremely vague standard, said Laura Reathaford, a partner in the Los Angeles office of Venable LLP’s labor and employment practice.
“It almost turns the employer into a mind reader,” she said, because the statute’s wording seems to suggest that businesses can somehow anticipate whether a worker will become a whistle-blower. This language also appears to open the door for employees to allege they were fired because their employer believed they were going to blow the whistle on illegal activities.
To insulate themselves as much as possible from this type of retaliation claim, businesses should carefully document all disciplinary actions taken against an employee. They should also make certain that the people who make decisions about terminations aren’t the same ones who investigate whistle-blower complaints, Whittaker said.
Unfortunately, employment lawyers and in-house counsel can’t provide definitive guidance on how to interpret this section of California’s whistle-blower law because no cases challenging it have yet come before California courts, Reathaford said.
There’s also no clear answer to the question of when employers can or should terminate an employee who has had performance issues and who has also engaged in the protected activity of whistle-blowing. In that situation, the termination has the potential to become fodder for a retaliation lawsuit, said Walter Stella, a labor and employment attorney with the Miller Law Group in San Francisco. “Can I wait a month [to terminate]? Three months? Six months? … We just have to look at the circumstances and make a calculated decision about weighing the risks and the strengths and say, ‘Now’s a good time’ or ‘Now’s not a good time.’”
HR professionals should be sure that their employee training programs and worker communications reinforce protections against retaliation for whistle-blowers. Training should include an assurance that the business is committed to complying with all local, state or federal laws and guaranteeing safe working conditions; the state’s whistle-blower statute covers all these areas, Whittaker said.
Workers should be encouraged to speak up if they have concerns and should never be restricted to reporting concerns solely to an in-house person or designated committee, he said. They should be advised that they also have the option of contacting an outside state or federal agency, such as the California State Attorney General’s Whistleblower Hotline at 1-800-952-5225, or the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA). OSHA has an online form and a hotline, 1-800-321-OSHA (6742).
A company’s whistle-blower policy must assure employees that whistle-blowers are protected from retaliatory action and that the company will not restrict their ability to report alleged wrongdoing. The Securities and Exchange Commission in April fined a Texas business $130,000 for requiring workers to sign confidentiality statements saying they could be disciplined or fired for discussing possible securities law violations with outside parties if they didn’t first get permission from the company’s lawyers. The business, KBR Inc., has since amended its confidentiality agreements to remove the threat of retaliatory measures.
Training for supervisors should include the importance of taking every complaint seriously. Managers never want to convey that a concern lacks merit, or they could be accused of discouraging whistle-blowers to come forward, particularly if the complaint is later deemed valid, Reathaford said. Open-ended, nonjudgmental questions that managers might ask include What’s the basis for your concern? Why do you think this is illegal or improper? Who should we talk to about this? How should we fix it?
If the manager can resolve the problem to the employee’s satisfaction or if the employee doesn’t want to proceed with any further action, the supervisor should document the discussion and how concerns were handled in a follow-up e-mail with a copy to HR, Stella said. “That little bit of a step becomes so important in defending these cases because it appears the company is taking action. It’s the failure to take action … that sets us up for, ultimately, the wrongdoing claim, which is retaliation,” he said.
If a supervisor provides the worker with outside resources, such as the state’s whistle-blower hotline number, that interaction should also be shared with HR.
The worker might never call the 800 number, but his conversation with the manager could be sufficient notice to his employer that he has engaged in protected activity and that any action against him could be viewed as retaliatory. An HR professional should circle back to the worker to make sure his concerns have been resolved. “The more you’re doing,” Stella said, “the more it seems you’re not just ignoring these complaints. … That’s what helps companies avoid the big verdicts.”
Privacy and Anonymity
State whistle-blower law does not guarantee privacy or anonymity for those who come forward, but Reathaford recommends that companies permit anonymous complaints and safeguard the privacy of whistle-blowers. Internal investigations should never be referenced by the employee’s name; instead, each case should be assigned a number and all communication should use that number. “Disclosure [of the complainant’s name] should be on a need-to-know basis,” she said. Similarly, company policy should make it clear that the whistle-blower is not entitled to know the results of any investigation triggered by her reporting.
HR professionals can play a key role if a worker alleges violations of workplace safety or federal law. For example, if an employee claims that the company is discharging toxic chemicals into a waterway or releasing unsafe products into the marketplace, HR should contact in-house counsel or the company’s legal advisors for guidance on how to proceed and whether federal or state agencies should be notified.
Workers have up to three years to file claims if they’re seeking damages. They have a one-year window from the date of the alleged incident if they’re seeking the imposition of statutory penalties. Under those timelines, cases that are pending will be adjudicated under the expanded protections for whistle-blowers that took effect on Jan. 1, 2014.
Whether those changes will result in more claims remains to be seen, but Reathaford, for one, anticipates a surge. “I would not be surprised if we saw more cases,” she said. “I’d be shocked if there weren’t.”
June D. Bell is a San Francisco-based writer who covers law firms, legal issues and HR matters for a variety of publications. Contact her at firstname.lastname@example.org.
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