Employers Beware: Whistleblower Complaints on the Rise

Be Extra Mindful of the Anti-Retaliation Provisions of Federal Law


In the wake of the recent unanimous decision of the United States Supreme Court in Murray v. UBS Securities, LLC, a whistleblower retaliation case, employers are advised to exercise extra caution in disciplining or terminating employees in the months ahead.

For example, the Occupational Safety and Health Administration (OSHA) is receiving more whistleblower complaints in many of its whistleblower protection categories and is approaching the record-high number received during the pandemic. The agency continues to hire personnel and shows every indication that it is aggressively investigating complaints when warranted.

OSHA’s Whistleblower Protection Program enforces the whistleblower provisions of the Sarbanes-Oxley Act, Section 11(c) of the Occupational Health and Safety Act, and 25 whistleblower statutes. Violating the anti-retaliation provisions of any federal law can be quite costly for employers who find themselves in such a predicament. Some of the awards for “back wages and punitive damages” in recent years have been significant.

The Sarbanes-Oxley Act

In the Murray v. UBS Securities ruling, the Supreme Court found that whistleblowers do not need to prove an employer’s retaliatory intent to be covered under the anti-retaliation provisions of the Sarbanes-Oxley Act 18 USC § 1514A (SOX). The Sarbanes-Oxley Act protects whistleblowers in fraud cases.

The Supreme Court decision appropriately rejected a decision by the United States Court of Appeals for the Second Circuit, which had vacated the plaintiff’s earlier jury verdict. The Second Circuit said that SOX requires a whistleblower-employee to prove by a “preponderance of the evidence that the employer took the adverse employment action against the whistleblower-employee with retaliatory intent.”

The Supreme Court disagreed and instead agreed with the Fifth and Ninth Circuits that the whistleblower protection provision does not impose this requirement. The Court noted that the statute contains a burden-shifting framework — from the complaining employee to the employer — and that proving retaliatory intent would be incompatible with this framework.

The law, as the Supreme Court has correctly interpreted it, only requires employees to show that their whistleblowing activity contributed to the employer’s decision to fire or otherwise discriminate against them. The decision has implications for several other federal laws that contain whistleblower language similar to Sarbanes-Oxley, and it will be interesting to see how lower courts will apply the Supreme Court’s new test for a whistleblower who alleges retaliation.

Section 11(c) of the OSH Act

The Occupational Safety and Health Administration (OSHA) has its own set of guidelines to protect whistleblowers. In recent years, the agency has made significant investments to improve complaint processing and make it easy for employees to report alleged OSHA violations.

Section 11(c) of the Occupational Safety and Health Act (the Act) prohibits employers from terminating or in any manner discriminating against any employee because the employee has taken one or more of the following actions:

  • Filed a complaint under any of the provisions of the Act or related to the Act.
  • Instituted or caused to be instituted any proceeding under or related to the Act.
  • Testified or is about to testify in any proceeding under the Act.
  • Exercised on his own behalf or on the behalf of others any rights afforded under the Act.

OSHA has published a comprehensive “Investigator’s Desk Aid” as an internal reference, which can also help employers understand how the government handles complaints.

Retaliation Can Be Costly

Some of the more notable and costly anti-retaliation decisions in recent years made one thing clear. In most cases, it’s best to resolve any complaint before it progresses to the court system.

An employee reports a suspicious contractor: Over a decade ago, an Amtrak employee filed a complaint, claiming he had received a negative performance evaluation — his first — after raising concerns about a specific contractor hired to test concrete on certain Amtrak tunnel projects. He was later notified that his position was being eliminated. He was eventually terminated when he could not find another position within Amtrak.

The employee filed a whistleblower case with OSHA, and in 2017, OSHA determined that the employee had been a victim of retaliation because he raised safety concerns and that Amtrak violated his protections under the Federal Railroad Safety Act. OSHA ordered Amtrak to reinstate the employee and pay him $892,551 in back pay, punitive damages, compensatory damages, and attorney fees and costs.

Employees assist OSHA in a safety investigation: In 2019, a federal judge in the United States District Court for the Eastern District of Pennsylvania awarded over a million dollars in lost wages and punitive damages to two former employees of Lloyd Industries. The jury found that the company had fired them in retaliation for their participation in a 2014 federal safety investigation by OSHA. What was most noteworthy in this case was the whopping $500,000 award for punitive damages, which remains the largest punitive award ever made under the antiretaliation provision (Section 11(c)) of the OSH Act.

An employee questions suspect accounting practices: In June 2021, the Department of Labor announced that OSHA had concluded its investigation of Equistar Chemicals LP, a subsidiary of LyondellBasell, one of the world’s largest plastics, chemicals, and refining companies. According to the press release, an account manager was placed into a “performance improvement program” and later fired after questioning accounting practices. OSHA ordered LyondellBasell to reinstate the account manager and pay $518,189 in lost wages and $145,293 in lost benefits. The employer must also “pay an estimated $50,962 in interest on the back wages, $50,000 in compensatory damages, and applicable attorney’s fees.” Additionally, OSHA ordered LyondellBasell to “expunge the account manager’s personnel record of any adverse information related to the whistleblower complaint.”

Watch What You Say…

As I’ve told my clients innumerable times over the years, how you respond to a complaint — the quality and completeness of your response — is critical. The quality of your initial response will make a big difference in how the investigation proceeds. Legal support in structuring and writing this response is highly recommended. Should you receive notification from OSHA about a complaint — or if you have questions about your internal management system for handling employee complaints — please don’t hesitate to contact me.

James F. Laboe

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