New Laws Expand Whistleblower Protections

Whistleblower Bounty Provisions

Among its many provisions, the Dodd-Frank Act incentivizes employees to report financial wrongdoing to the government by entitling them to a portion of monetary sanctions levied by the Commodity Futures Trading Commission (“CFTC”) or the Securities Exchange Commission (“SEC”) (collectively, “Commissions”). The Dodd-Frank Act amends the Commodities Exchange Act (' 748) and the Securities Exchange Act of 1934 (' 922) to specify that individuals, who provide original information related to a violation of the law that leads to a government sanction of over $1 million, generally will be entitled to ten to thirty percent of the sanction. Importantly, providing information related to violations of the law that occurred prior to the enactment of the Dodd-Frank Act also qualifies a whistleblower for a bounty, so long as the disclosure was made after the Act's enactment.

Sanctions include all penalties, disgorgement, restitution, and interest; and the Commissions have discretion to determine the percentage awarded. Factors to be considered in determining the bounty percentage include the significance of the information provided by the whistleblower, the success of the action, the degree of assistance provided by the whistleblower and the whistleblower's counsel, the deterrent value of the award, and any other factors the Commissions develop by rule or regulation.

But not everyone is eligible to recover the bounty. Individuals who fail to provide information requested by the Commissions, who gained the information through auditing required by the relevant law, or who are employees of the Commissions or other enforcement agencies are not eligible for the award. Neither are individuals who are convicted of participating in the wrongdoing they reported; if they avoid conviction (either through a cooperation agreement or through other means), however, they are entitled to the bounty. Furthermore, while whistleblowers may submit information anonymously, to claim an award, they must disclose their identity. If a whistleblower disagrees with the Commissions' award determination, he or she may appeal the award to the relevant court of appeals within 30 days.

To further encourage whistleblowers to step forward, the law protects individuals who take advantage of the whistleblower bounty provisions from retaliation in the workplace. Both the Commodities Exchange Act and the Securities Exchange Act of 1934 now prohibit employers from retaliating against individuals because they have provided information of wrongdoing to the Commissions or have participated in an investigation by the Commissions relating to the information they provided. In addition, the Securities Exchange Act affords protection to individuals who make disclosures required or protected under SOX, the Securities Exchange Act, or any other law, rule, or regulation subject to the jurisdiction of the SEC, and the Act defines retaliation broadly to include discharging, demoting, suspending, threatening, harassing, directly or indirectly, or in any other manner discriminating against a whistleblower in the terms and conditions of employment.

Under the Commodities Exchange Act, individuals who are subjected to retaliation have up to two years to bring a claim in federal court and are entitled to reinstatement, back pay and interest, and compensation for any special damages incurred, including litigation costs, expert fees, and reasonable attorneys' fees. Under the Securities Exchange Act, individuals have up to six years after the retaliatory act or three years after learning of the retaliatory act, whichever is later (but in any event no later than 10 years), to bring a claim in federal court and are entitled to reinstatement, double back pay with interest, and compensation for litigation costs, expert fees, and reasonable attorneys' fees. Unlike SOX, individuals are not required first to file their claims with a federal administrative agency under either act.

Consumer Financial Products and Services
Retaliation Provisions

The Dodd-Frank Act (' 1057) also includes new protections for employees who report wrongdoing related to the offering or provision of consumer financial products or services, such as loans, property appraisals, financial advice, or credit counseling. Specifically, an employer may not fire or otherwise discriminate against an employee because he or she reported wrongdoing, provided information related to wrongdoing, or refused to engage in behavior the employee reasonably believed violated financial laws. Importantly, the law protects employees who act in the ordinary course of their duties, at their own initiative, or at the request of their employer. The specific protection for activities undertaken in the ordinary course of an employee's work duties was a response to decisions limiting whistleblower protections under SOX, as well as the Supreme Court's decision in Garcetti v. Ceballos, 547 U.S. 410 (2006), where the Court held that speech made pursuant to a federal employee's professional duties is not protected.

To establish a retaliation claim, an employee must show that her protected activity was a contributing factor to the employer's adverse actions. If the employee meets this burden, the employer may escape liability only by providing clear and convincing evidence that the same action would have been taken in the absence of protected activity. This framework, which favors the employee, is similar to that adopted in other whistleblower laws, including ARRA, SOX, and the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (“AIR 21″).

The framework for pursuing claims also is similar to that of other whistleblower statutes. First, an employee who has been retaliated against because of her protected activities has up to 180 days to file a complaint with the Secretary of Labor. Once the Secretary of Labor has received the complaint, she must initiate an investigation within 60 days, during which both the complainant and the person alleged to have violated the law (“respondent”) have an opportunity to submit written statements and witnesses statements.

At the conclusion of the investigation, the Secretary must issue a written determination. When the Secretary determines that retaliation in violation of the law has occurred, she must submit a preliminary order providing statutory relief for the complainant. Available relief includes reinstatement and restoration of terms, conditions, and privileges associated with the position; back pay; costs and expenses, including litigation costs, expert witness fees, and reasonable attorneys' fees; injunctive relief; and compensatory damages. If the Secretary determines that the claim was brought in bad faith or is frivolous, she may order attorneys' fees, not to exceed $1000, to be paid by the complainant.

Within 30 days of the issuance of the preliminary order, either the complainant or the respondent may file objections and request a hearing; if such a request is not made, the preliminary order becomes the final order. The claimant may remove the action to federal district court for de novo review by a jury within 210 days after the filing of the complaint or within 90 days of receiving a written determination, while a respondent's recourse is through the Court of Appeals. Claims brought under this law are exempt from forced arbitration agreements.

Amendments to the Sarbanes-Oxley Act

In addition to creating financial incentives for reporting wrongdoing and prohibiting retaliation, the Dodd-Frank Act (' 922) amends SOX to make that law more favorable to employees. It doubles the time period for filing claims of retaliation with the Department of Labor from 90 days to 180 days and prohibits forced arbitration of SOX retaliation claims. It also clarifies that employees have the right to have their SOX claims heard by a jury in federal court and extends whistleblower protections to employees of nationally recognized statistical rating organizations like Standard & Poor's, A.M. Best Company, Moody's Investor Services, and Fitch Ratings. The Dodd-Frank Act (' 929A) also clarifies that SOX retaliation prohibitions apply to employees of private subsidiaries of publicly-traded companies, if the private subsidiaries' “financial information is included in the consolidated financial statements of [the parent] company.”

Consumer Products Safety Improvement Act

The Dodd-Frank Act comes on the heels of other new whistleblowing statutes. For instance, in response to events like the lead paint toy scandal of 2007, Congress passed the Consumer Products Safety Improvement Act (the “CPSIA”), codified at 15 U.S.C. ” 2051 et al. The whistleblowing provisions of the CPSIA, found at 15 U.S.C ' 2087, apply to employees of manufacturers, private labelers, distributors, and retailers of consumer products and are estimated to encompass 20 million employees within the United States. (See http://www.whistleblowers.org/index.php?option=com_content&task=view&id=409&Itemid=141. Last visited 9/8/2010.) The term “consumer product” means any article, or component part, produced or distributed for sale to a consumer for personal use, consumption or enjoyment in or around a household or residence, a school, in recreation, or otherwise; that term does not include articles not intended for consumers; tobacco and tobacco products; motor vehicles or motor vehicle equipment; pesticides; items subject to Internal Revenue Code ' 4181 (firearms and ammunition); aircraft or related equipment; drugs, devices or cosmetics covered under the Federal Food, Drug and Cosmetic Act; or foods, because many of these categories are regulated under other statutes.

The CPSIA protects employees who provide or are about to provide information to their employer, the federal government, or a state Attorney General concerning acts or omissions that the employee reasonably believes to be a violation of the CPSIA or any other statute enforced by the Consumer Product Safety Commission. It also protects employees who testify or are about to testify in a proceeding concerning any such violations; assist or participate (or are about to assist or participate) in such a proceeding; or who object to, or refuse to participate in, any activity, policy, practice, or assigned task that the employee reasonably believes to be in violation of any provision of the CPSIA or any other act enforced by the Commission. Like the Dodd-Frank Act's consumer financial products or services anti-retaliation provisions, the CPSIA prohibits retaliation even if the protected activity is done in the ordinary course of the employee's duties, at the employee's initiative, or at the request of the employer.

Retaliation is defined under the CPSIA as discrimination in the compensation, terms, conditions, or privileges of employment. While the CPSIA limits retaliation to adverse actions affecting the workplace, it otherwise defines retaliation broadly. Therefore, it is likely that courts will apply the Supreme Court's retaliation standards set forth in Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006), when determining what constitutes retaliation under the CPSIA. In Burlington Northern, the Court defined retaliation as an adverse action that would have “dissuaded a reasonable worker from making or supporting a charge of discrimination” and noted that “context matters.” Id. at 68-69.

As with the Dodd-Frank Act's consumer financial products and services anti-retaliation provisions, to establish a retaliation claim under the CPSIA, an employee must show that his or her protected activity was a contributing factor to the employer's adverse actions and the employer may escape liability only by providing clear and convincing evidence that the same action would have been taken in the absence of protected activity. The framework for pursuing CPSIA claims also is identical to that of the Dodd-Frank Act's consumer financial products and services anti-retaliation provisions. Available relief includes reinstatement with the same seniority status; back pay with interest; compensation for special damages like litigation costs, expert witness fees, and reasonable attorneys' fees; injunctive relief; and compensatory damages.

Fraud Enforcement and Recovery Act

The Fraud Enforcement and Recovery Act (“FERA”) was passed in 2009 to strengthen the False Claims Act (“FCA”) by extending whistleblower protections and to override appellate court precedents that limited the law's reach.

Prior to the passage of FERA, federal qui tam law protections did not apply if the retaliating party was not in a legal employment relationship with the whistleblower. Because relief available under the FCA includes reinstatement or back wages, the FCA was interpreted as requiring an employment relationship between the plaintiff and defendant. See, e.g., Mruz v. Caring, Inc., 991 F. Supp. 701 (D.N.J. 1998). This left contractors, sub-contractors, and agents vulnerable to retaliation for blowing the whistle on fraud against the government. As a result of FERA, however, such persons and entities both are now afforded whistleblower protections and forbidden from engaging in retaliation. This change was part of broader measures in the law that closed the loophole by which companies used subcontractors to escape liability.

The FERA also overturned the D.C. Circuit's decision in Totten v. Bombardier Corp, 380 F.3d 488 (D.C. Cir. 2004). In a decision authored by Chief Justice Roberts when he served on the intermediate court, the D.C. Circuit held that a qui tam claim was not actionable if the object of the fraud (in this case, Amtrak) was not a government agency. The court held this, despite the fact that Amtrak paid the false claims with money secured through a government grant.

After FERA, however, any fraud that implicates federal dollars may be the subject of a whistleblower complaint, not just fraud directly against a government agency. The FERA retains the structure for reporting whistleblower complaints outlined in the False Claims Act. Available remedies include reinstatement, double back pay, and compensation for special damages, including litigation costs and reasonable attorneys' fees.

Incidentally, the Dodd-Frank Act (' 1079B) further amends the FCA by expanding the FCA's definition of protected activity to include “lawful acts done by the employee, contractor, or agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of [the False Claims Act].” The amendments also clarify that a three year statute of limitations applies for claims brought under the FCA's anti-retaliation provisions, addressing the Supreme Court's 2005 decision in Graham County Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 545 U.S. 409 (2005). In that decision, the Court held that the applicable statute of limitations for FCA retaliation claims was the same as that of the most closely analogous state statute of limitations.

The Implementing Recommendations of the 9/11 Commission Act

The 9/11 Commission recognized that the United States transportation system is vulnerable to terrorist attacks and that transportation employees are the frontline defense for protecting this system from both internal and external threats. As a result, The Implementing Recommendations of the 9/11 Commission Act of 2007 (the “9/11 Commission Act”) expanded whistleblower protections for commercial truck drivers, railroad employees, and public transit workers.

Under the law, commercial truck drivers (49 U.S.C. ' 31105), railroad employees (49 U.S.C. ' 20109), and public transit workers (6 U.S.C. ' 1142) enjoy broad protections when disclosing safety violations, security threats, and misuse of taxpayer funds. The law also protects these individuals when they testify before Congress or raise safety concerns to their managers. Like the CPSIA and FERA, the 9/11 Commission Act dictates that contractors, subcontractors and agents also are prohibited from engaging in retaliation against employees.

The framework for pursuing claims under the 9/11 Commission Act is identical to that of the CPSIA and, like the CPSIA, the statute of limitations for filing a complaint with the Secretary of Labor is 180 days. Remedies for whistleblowers subjected to retaliation include reinstatement, compensatory damages, attorneys' fees, and up to $250,000 in punitive damages.

Conclusion

These recently enacted whistleblower laws shed light on the future of federal retaliation claims. First, given that the three most expansive whistleblower statutes to be passed since Sarbanes-Oxley and the Garcetti decision ' the Dodd-Frank Act, ARRA and the CPSIA ' apply to individuals acting in the course of their employment, Congress's intent to protect people acting in the course of their employment seems to be clear. Courts considering this question in the context of Title VII or other retaliation claims may look to these statutes for guidance. Second, while the 9/11 Commission Act, FERA, the CPSIA, ARRA, and the Dodd-Frank Act are the most recent laws to expand protections for whistleblowers, they may not be the last. The Whistleblower Protection Enhancement Act, currently winding its way through Congress, would further expand whistleblowing protections for federal employees by, among other things, providing additional recourse through the federal courts, clarifying that federal employees acting in the normal course of their duties are protected from retaliation, and covering national security employees.

Wayne N. Outten, a member of this newsletter's Board of Editors, is the Managing Partner of Outten & Golden LLP and is co-chair of the firm's Whistleblower and Retaliation Practice Group. He has authored and co-authored many books, chapters, and articles on employment (including whistleblower and retaliation claims and litigation) and partnership law. Cara E. Greene is an associate at Outten & Golden LLP's New York City office and is a member of the firm's Whistleblower and Retaliation Practice Group. She has authored and co-authored numerous articles related to employment and partnership law.

Federal statutes protecting whistleblowers are on the rise. Most recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“The Dodd-Frank Act”), meant to overhaul and strengthen federal oversight of the financial system, included workplace protections for whistleblowers in the financial services industry. But that is not the only new law to include whistleblower protections. In addition to the American Recovery and Reinvestment Act (“ARRA”) (see “The Recovery Act's Daunting Whistleblower Provisions,” Employment Law Strategist, Oct. 2009), several other federal whistleblower protection statutes have been enacted or modified in the last few years. These new statutes, including the Consumer Products Safety Improvement Act (2008), the Fraud Enforcement and Recovery Act (2009), and The Implementing Recommendations of the 9/11 Commission Act of 2007, when combined with the Dodd-Frank Act and ARRA, dramatically expand retaliation protections for millions of employees who blow the whistle on workplace wrongdoing.

The Dodd-Frank Wall Street Reform and Consumer
Protection Act

The Dodd-Frank Act, signed into law by President Obama on July 21, 2010, was enacted as a way to regulate the financial services industry, which many blame for the recent economic recession. In an attempt to ensure that industry wrongdoing does not go unreported, the Dodd-Frank Act adds financial incentives to encourage whistleblowing, prohibits retaliation against employees who blow the whistle, and amends the Sarbanes-Oxley Act of 2002 (“SOX”) to make it more favorable for employees.

Whistleblower Bounty Provisions

Among its many provisions, the Dodd-Frank Act incentivizes employees to report financial wrongdoing to the government by entitling them to a portion of monetary sanctions levied by the Commodity Futures Trading Commission (“CFTC”) or the Securities Exchange Commission (“SEC”) (collectively, “Commissions”). The Dodd-Frank Act amends the Commodities Exchange Act (' 748) and the Securities Exchange Act of 1934 (' 922) to specify that individuals, who provide original information related to a violation of the law that leads to a government sanction of over $1 million, generally will be entitled to ten to thirty percent of the sanction. Importantly, providing information related to violations of the law that occurred prior to the enactment of the Dodd-Frank Act also qualifies a whistleblower for a bounty, so long as the disclosure was made after the Act's enactment.

Sanctions include all penalties, disgorgement, restitution, and interest; and the Commissions have discretion to determine the percentage awarded. Factors to be considered in determining the bounty percentage include the significance of the information provided by the whistleblower, the success of the action, the degree of assistance provided by the whistleblower and the whistleblower's counsel, the deterrent value of the award, and any other factors the Commissions develop by rule or regulation.

But not everyone is eligible to recover the bounty. Individuals who fail to provide information requested by the Commissions, who gained the information through auditing required by the relevant law, or who are employees of the Commissions or other enforcement agencies are not eligible for the award. Neither are individuals who are convicted of participating in the wrongdoing they reported; if they avoid conviction (either through a cooperation agreement or through other means), however, they are entitled to the bounty. Furthermore, while whistleblowers may submit information anonymously, to claim an award, they must disclose their identity. If a whistleblower disagrees with the Commissions' award determination, he or she may appeal the award to the relevant court of appeals within 30 days.

To further encourage whistleblowers to step forward, the law protects individuals who take advantage of the whistleblower bounty provisions from retaliation in the workplace. Both the Commodities Exchange Act and the Securities Exchange Act of 1934 now prohibit employers from retaliating against individuals because they have provided information of wrongdoing to the Commissions or have participated in an investigation by the Commissions relating to the information they provided. In addition, the Securities Exchange Act affords protection to individuals who make disclosures required or protected under SOX, the Securities Exchange Act, or any other law, rule, or regulation subject to the jurisdiction of the SEC, and the Act defines retaliation broadly to include discharging, demoting, suspending, threatening, harassing, directly or indirectly, or in any other manner discriminating against a whistleblower in the terms and conditions of employment.

Under the Commodities Exchange Act, individuals who are subjected to retaliation have up to two years to bring a claim in federal court and are entitled to reinstatement, back pay and interest, and compensation for any special damages incurred, including litigation costs, expert fees, and reasonable attorneys' fees. Under the Securities Exchange Act, individuals have up to six years after the retaliatory act or three years after learning of the retaliatory act, whichever is later (but in any event no later than 10 years), to bring a claim in federal court and are entitled to reinstatement, double back pay with interest, and compensation for litigation costs, expert fees, and reasonable attorneys' fees. Unlike SOX, individuals are not required first to file their claims with a federal administrative agency under either act.

Consumer Financial Products and Services
Retaliation Provisions

The Dodd-Frank Act (' 1057) also includes new protections for employees who report wrongdoing related to the offering or provision of consumer financial products or services, such as loans, property appraisals, financial advice, or credit counseling. Specifically, an employer may not fire or otherwise discriminate against an employee because he or she reported wrongdoing, provided information related to wrongdoing, or refused to engage in behavior the employee reasonably believed violated financial laws. Importantly, the law protects employees who act in the ordinary course of their duties, at their own initiative, or at the request of their employer. The specific protection for activities undertaken in the ordinary course of an employee's work duties was a response to decisions limiting whistleblower protections under SOX, as well as the Supreme Court's decision in Garcetti v. Ceballos , 547 U.S. 410 (2006), where the Court held that speech made pursuant to a federal employee's professional duties is not protected.

To establish a retaliation claim, an employee must show that her protected activity was a contributing factor to the employer's adverse actions. If the employee meets this burden, the employer may escape liability only by providing clear and convincing evidence that the same action would have been taken in the absence of protected activity. This framework, which favors the employee, is similar to that adopted in other whistleblower laws, including ARRA, SOX, and the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (“AIR 21″).

The framework for pursuing claims also is similar to that of other whistleblower statutes. First, an employee who has been retaliated against because of her protected activities has up to 180 days to file a complaint with the Secretary of Labor. Once the Secretary of Labor has received the complaint, she must initiate an investigation within 60 days, during which both the complainant and the person alleged to have violated the law (“respondent”) have an opportunity to submit written statements and witnesses statements.

At the conclusion of the investigation, the Secretary must issue a written determination. When the Secretary determines that retaliation in violation of the law has occurred, she must submit a preliminary order providing statutory relief for the complainant. Available relief includes reinstatement and restoration of terms, conditions, and privileges associated with the position; back pay; costs and expenses, including litigation costs, expert witness fees, and reasonable attorneys' fees; injunctive relief; and compensatory damages. If the Secretary determines that the claim was brought in bad faith or is frivolous, she may order attorneys' fees, not to exceed $1000, to be paid by the complainant.

Within 30 days of the issuance of the preliminary order, either the complainant or the respondent may file objections and request a hearing; if such a request is not made, the preliminary order becomes the final order. The claimant may remove the action to federal district court for de novo review by a jury within 210 days after the filing of the complaint or within 90 days of receiving a written determination, while a respondent's recourse is through the Court of Appeals. Claims brought under this law are exempt from forced arbitration agreements.

Amendments to the Sarbanes-Oxley Act

In addition to creating financial incentives for reporting wrongdoing and prohibiting retaliation, the Dodd-Frank Act (' 922) amends SOX to make that law more favorable to employees. It doubles the time period for filing claims of retaliation with the Department of Labor from 90 days to 180 days and prohibits forced arbitration of SOX retaliation claims. It also clarifies that employees have the right to have their SOX claims heard by a jury in federal court and extends whistleblower protections to employees of nationally recognized statistical rating organizations like Standard & Poor's, A.M. Best Company, Moody's Investor Services, and Fitch Ratings. The Dodd-Frank Act (' 929A) also clarifies that SOX retaliation prohibitions apply to employees of private subsidiaries of publicly-traded companies, if the private subsidiaries' “financial information is included in the consolidated financial statements of [the parent] company.”

Consumer Products Safety Improvement Act

The Dodd-Frank Act comes on the heels of other new whistleblowing statutes. For instance, in response to events like the lead paint toy scandal of 2007, Congress passed the Consumer Products Safety Improvement Act (the “CPSIA”), codified at 15 U.S.C. ” 2051 et al. The whistleblowing provisions of the CPSIA, found at 15 U.S.C ' 2087, apply to employees of manufacturers, private labelers, distributors, and retailers of consumer products and are estimated to encompass 20 million employees within the United States. (See http://www.whistleblowers.org/index.php?option=com_content&task=view&id=409&Itemid=141. Last visited 9/8/2010.) The term “consumer product” means any article, or component part, produced or distributed for sale to a consumer for personal use, consumption or enjoyment in or around a household or residence, a school, in recreation, or otherwise; that term does not include articles not intended for consumers; tobacco and tobacco products; motor vehicles or motor vehicle equipment; pesticides; items subject to Internal Revenue Code ' 4181 (firearms and ammunition); aircraft or related equipment; drugs, devices or cosmetics covered under the Federal Food, Drug and Cosmetic Act; or foods, because many of these categories are regulated under other statutes.

The CPSIA protects employees who provide or are about to provide information to their employer, the federal government, or a state Attorney General concerning acts or omissions that the employee reasonably believes to be a violation of the CPSIA or any other statute enforced by the Consumer Product Safety Commission. It also protects employees who testify or are about to testify in a proceeding concerning any such violations; assist or participate (or are about to assist or participate) in such a proceeding; or who object to, or refuse to participate in, any activity, policy, practice, or assigned task that the employee reasonably believes to be in violation of any provision of the CPSIA or any other act enforced by the Commission. Like the Dodd-Frank Act's consumer financial products or services anti-retaliation provisions, the CPSIA prohibits retaliation even if the protected activity is done in the ordinary course of the employee's duties, at the employee's initiative, or at the request of the employer.

Retaliation is defined under the CPSIA as discrimination in the compensation, terms, conditions, or privileges of employment. While the CPSIA limits retaliation to adverse actions affecting the workplace, it otherwise defines retaliation broadly. Therefore, it is likely that courts will apply the Supreme Court's retaliation standards set forth in Burlington Northern & Santa Fe Railway Co. v. White , 548 U.S. 53 (2006), when determining what constitutes retaliation under the CPSIA. In Burlington Northern, the Court defined retaliation as an adverse action that would have “dissuaded a reasonable worker from making or supporting a charge of discrimination” and noted that “context matters.” Id. at 68-69.

As with the Dodd-Frank Act's consumer financial products and services anti-retaliation provisions, to establish a retaliation claim under the CPSIA, an employee must show that his or her protected activity was a contributing factor to the employer's adverse actions and the employer may escape liability only by providing clear and convincing evidence that the same action would have been taken in the absence of protected activity. The framework for pursuing CPSIA claims also is identical to that of the Dodd-Frank Act's consumer financial products and services anti-retaliation provisions. Available relief includes reinstatement with the same seniority status; back pay with interest; compensation for special damages like litigation costs, expert witness fees, and reasonable attorneys' fees; injunctive relief; and compensatory damages.

Fraud Enforcement and Recovery Act

The Fraud Enforcement and Recovery Act (“FERA”) was passed in 2009 to strengthen the False Claims Act (“FCA”) by extending whistleblower protections and to override appellate court precedents that limited the law's reach.

Prior to the passage of FERA, federal qui tam law protections did not apply if the retaliating party was not in a legal employment relationship with the whistleblower. Because relief available under the FCA includes reinstatement or back wages, the FCA was interpreted as requiring an employment relationship between the plaintiff and defendant. See, e.g., Mruz v. Caring, Inc. , 991 F. Supp. 701 (D.N.J. 1998). This left contractors, sub-contractors, and agents vulnerable to retaliation for blowing the whistle on fraud against the government. As a result of FERA, however, such persons and entities both are now afforded whistleblower protections and forbidden from engaging in retaliation. This change was part of broader measures in the law that closed the loophole by which companies used subcontractors to escape liability.

The FERA also overturned the D.C. Circuit's decision in Totten v. Bombardier Corp, 380 F.3d 488 (D.C. Cir. 2004). In a decision authored by Chief Justice Roberts when he served on the intermediate court, the D.C. Circuit held that a qui tam claim was not actionable if the object of the fraud (in this case, Amtrak) was not a government agency. The court held this, despite the fact that Amtrak paid the false claims with money secured through a government grant.

After FERA, however, any fraud that implicates federal dollars may be the subject of a whistleblower complaint, not just fraud directly against a government agency. The FERA retains the structure for reporting whistleblower complaints outlined in the False Claims Act. Available remedies include reinstatement, double back pay, and compensation for special damages, including litigation costs and reasonable attorneys' fees.

Incidentally, the Dodd-Frank Act (' 1079B) further amends the FCA by expanding the FCA's definition of protected activity to include “lawful acts done by the employee, contractor, or agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of [the False Claims Act].” The amendments also clarify that a three year statute of limitations applies for claims brought under the FCA's anti-retaliation provisions, addressing the Supreme Court's 2005 decision in Graham County Soil & Water Conservation Dist. v. U.S. ex rel. Wilson , 545 U.S. 409 (2005). In that decision, the Court held that the applicable statute of limitations for FCA retaliation claims was the same as that of the most closely analogous state statute of limitations.

The Implementing Recommendations of the 9/11 Commission Act

The 9/11 Commission recognized that the United States transportation system is vulnerable to terrorist attacks and that transportation employees are the frontline defense for protecting this system from both internal and external threats. As a result, The Implementing Recommendations of the 9/11 Commission Act of 2007 (the “9/11 Commission Act”) expanded whistleblower protections for commercial truck drivers, railroad employees, and public transit workers.

Under the law, commercial truck drivers (49 U.S.C. ' 31105), railroad employees (49 U.S.C. ' 20109), and public transit workers (6 U.S.C. ' 1142) enjoy broad protections when disclosing safety violations, security threats, and misuse of taxpayer funds. The law also protects these individuals when they testify before Congress or raise safety concerns to their managers. Like the CPSIA and FERA, the 9/11 Commission Act dictates that contractors, subcontractors and agents also are prohibited from engaging in retaliation against employees.

The framework for pursuing claims under the 9/11 Commission Act is identical to that of the CPSIA and, like the CPSIA, the statute of limitations for filing a complaint with the Secretary of Labor is 180 days. Remedies for whistleblowers subjected to retaliation include reinstatement, compensatory damages, attorneys' fees, and up to $250,000 in punitive damages.

Conclusion

These recently enacted whistleblower laws shed light on the future of federal retaliation claims. First, given that the three most expansive whistleblower statutes to be passed since Sarbanes-Oxley and the Garcetti decision ' the Dodd-Frank Act, ARRA and the CPSIA ' apply to individuals acting in the course of their employment, Congress's intent to protect people acting in the course of their employment seems to be clear. Courts considering this question in the context of Title VII or other retaliation claims may look to these statutes for guidance. Second, while the 9/11 Commission Act, FERA, the CPSIA, ARRA, and the Dodd-Frank Act are the most recent laws to expand protections for whistleblowers, they may not be the last. The Whistleblower Protection Enhancement Act, currently winding its way through Congress, would further expand whistleblowing protections for federal employees by, among other things, providing additional recourse through the federal courts, clarifying that federal employees acting in the normal course of their duties are protected from retaliation, and covering national security employees.

Wayne N. Outten, a member of this newsletter's Board of Editors, is the Managing Partner of Outten & Golden LLP and is co-chair of the firm's Whistleblower and Retaliation Practice Group. He has authored and co-authored many books, chapters, and articles on employment (including whistleblower and retaliation claims and litigation) and partnership law. Cara E. Greene is an associate at Outten & Golden LLP's New York City office and is a member of the firm's Whistleblower and Retaliation Practice Group. She has authored and co-authored numerous articles related to employment and partnership law.