Affordable Care Act, Conscientious Employee Protection Act, Dodd-Frank Wall Street Reform and Consumer Protection Act, Securities and Exchange Commission (SEC), Whistleblower, Whistleblower Complaints

Hear that? More whistles are blowing

That seems to be the message from Congress and the courts in the past year, as the number and variety of workplace whistleblower claims keep expanding.

First, the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, seem to be finally gaining traction, as the “Office of the Whistleblower” of the Securities and Exchange Commission (SEC) announced that it received 3,238 whistleblower complaints and tips in fiscal year 2013 (the most ever), and obtained judgments and sanctions exceeding $1,000,000 in 118 different matters (the most ever).  In addition, the SEC issued four monetary awards to whistleblowers under Dodd-Frank in 2013, including a whopping $14 million award (the largest ever under Dodd-Frank) to a whistleblower whose information led to the recovery of investor funds.  Given that Dodd-Frank provides that whistleblowers will be awarded 10-30 percent of the monetary sanctions collected, we can presume that the sanctions collected were between $47 million and $140 million.  Nice tip for investors.

Second, the beloved Affordable Care Act (ACA), which is taking full effect this year, includes protections for employees who are retaliated against for engaging in protected activities, including: (1) receiving a health insurance marketplace subsidy or health plan cost-sharing reduction; (2) reporting, reasonably and in good faith, a violation of the ACA to the employer, the federal government or the state attorney general; (3) participating in a proceeding concerning an ACA violation; or (4) objecting to or refusing to participate in activity reasonably believed to violate the ACA.  Claims must be filed with OSHA.  Expect to see many of these cases soon.

Third, a New Jersey court has rejected a recent line of cases that had held that, if the alleged protected conduct fell within the plaintiff’s job duties and responsibilities, the employee could not bring a claim under the state’s Conscientious Employee Protection Act (CEPA).  In Lippman v. Ethicon, Inc., the Appellate Division of the New Jersey Superior Court rejected the reasoning reflected in the earlier cases as contrary to the “broad remedial purposes” of CEPA, and held that “watchdog employees” are “the most vulnerable to retaliation because they are uniquely positioned to know where the problem areas are and to speak out when corporate profits are put ahead of consumer safety.”  A “watchdog employee” bringing such a claim, however, must either (a) first pursue and exhaust all internal means of securing compliance, or (b) refuse to participate in the objectionable conduct.

The take-home for employers from these developments:

  • Learn about these new laws and ensure that your company’s policies and practices comply;
  • As needed, adopt a compliance policy and code of conduct, and train your managers and employees, preferably with visible support from C-level officers;
  • Set up an anonymous hotline or ombudsman for reporting suspected compliance issues; and
  • React promptly and effectively to any complaint, and ensure that no retaliation occurs.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLCFor more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.


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