Whistleblower Laws

There are many different federal and state “whistleblower” laws that protect employees who have the courage to report what they believe to be unlawful conduct on the part of their employers or others (such as colleagues or clients). Wigdor LLP has successfully handled many of these cases, some of which have helped define the contours of protected whistleblower activity. The Firm also has counseled many clients (both individuals and employers) in handling circumstances involving whistleblower reports and investigations.

A series of federal laws protects employees who report or testify about unsafe conditions or other violations to federal enforcement agencies. The Sarbanes-Oxley Act (SOX) and Dodd-Frank Act protect employees who report certain types of fraud or violations of securities laws or other legal requirements either to the Securities and Exchange Commission (SEC) or within their company. SOX protects whistleblowing in a variety of forms, including reporting to government officials or supervisors and participating in SEC or shareholder investigations or legal proceedings. Most provisions of SOX only apply to publicly traded companies, and SOX requires that these companies create internal and independent audit committees, as well as an internal procedure for employees to file anonymous whistleblower complaints. SOX also requires that, under certain circumstances, attorneys practicing before the SEC blow the whistle on their employer or client. Additionally, SOX prohibits all companies, publicly traded or not, from retaliating against an employee for providing truthful information to a law enforcement officer about the commission or possible commission of a federal offense. The SEC has full authority to enforce all parts of SOX, including the whistleblower protection provisions. A SOX complaint must be filed with the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) within 180 days of the alleged discriminatory act or when the employee learned of the alleged retaliation.

The Dodd-Frank Wall Street Reform and Consumer Protection Act expanded upon SOX by providing incentives to whistleblowers through a bounty program, in which individuals who provide information to the SEC that results in sanctions of over $1 million are entitled to anywhere from 10% to 30% of the monetary sanctions. The Dodd-Frank Act also prohibits retaliation against those who assist in any SEC investigation or legal proceedings relating to such violations, as well as those who make disclosures that are required or protected under various securities laws. The private right of action created by the Dodd-Frank Act provides for reinstatement, double back pay, and litigation costs and attorneys’ fees. Unlike the 180-day filing requirement under SOX, the Dodd-Frank Act has a much longer statute of limitations and no administrative procedural requirement, allowing for claims to be filed directly in federal court up to 6 years after the alleged retaliatory act, or 3 years after the facts material to the claim are known.

Some states have whistleblower protections laws as well, such as New Jersey’s relatively broad Conscientious Employee Protection Act (CEPA) and certain provisions of the New York Labor Law. The CEPA protects against retaliation regarding a wide array of whistleblower activity, including, but not limited to: disclosing or threatening to disclose an employer’s unlawful activity, providing information about the employer’s unlawful activity to a public body conducting an investigation after the employee has brought the activity to the attention of a supervisor or when the activity is known to the supervisor(s), and providing information regarding any fraudulent or criminal activity. The CEPA also protects employees from retaliation for providing information about the unlawful activity of another employer with whom his/her own employer has a business relationship.

The New York Labor Law has anti-retaliation protections for employees who report acts that endanger public safety or (for those in the healthcare industry) the quality of patient care. To invoke the public safety whistleblower protection of the New York Labor Law, the activity reported must present a substantial and specific danger to the public health. To have whistleblower protection under the statutes, the employee’s belief that an employee’s activity endangers the public safety must be accurate, but an employee’s belief that an activity is improper quality of patient care does not, only reasonable and in good faith. These protections cover reports to both a supervisor and a public body, but to invoke protection for disclosures to a public body the employee must have first brought the dangerous activity to the attention of a supervisor to allow the employer a reasonable amount of time to correct the activity, policy, or practice. These anti-retaliation provisions also protect employees who object to or refuse to participate in an activity, policy, or practice that presents a substantial and specific danger to public safety or constitutes improper quality of care. Generally, a complaint for a whistleblower retaliation violation under the New York Labor Law must be filed within 3 years of the alleged retaliatory act. A successful whistleblower suit under the New York Labor Law may entitle an employee to reinstatement to the same position, reinstatement of full fringe benefits, and compensation for lost wages and benefits.

Employees who have learned of and report false charges or claims filed by a company with federal or state governments (such as fraudulent Medicare charges) also may be protected from retaliation as whistleblowers and may have grounds to file a qui tam action, in which the employee brings a lawsuit on behalf of the government and may share in any amounts recovered by or for the government from the wrongdoer. Qui tam actions are often brought under the False Claims Act (FCA), which protects against whistleblowers who have evidence of fraud being committed against government programs or contracts. However, one cannot bring a qui tam action once the government has already filed a suit based on the same evidence as you. A qui tam action must be filed within 6 years from the date of the FCA violation, or 3 years after the government knows or should have known about the violation, but in no event longer than 10 years after the violation. The whistleblower protection under the FCA provides that any employee who is demoted, harassed, or discriminated against because of lawful acts in furtherance of the FCA is entitled to such relief as reinstatement, double back pay, and compensation for any special damages including reasonable attorneys’ fees and litigation costs.