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Economic Stimulus Package Creates New Employee Whistleblower Protections

Earlier this year the American Recovery and Reinvestment Act of 2009 (ARRA) was enacted to address the current economic challenges facing our country. Contained in the ARRA are new whistleblower protections for employees of “non-federal employers” receiving stimulus funds, including public school districts and their contractors and subcontractors.

The ARRA’s whistleblower protections prohibit covered employers from discharging, demoting, or otherwise discriminating against an employee in retaliation for disclosing information the employee reasonably believes is evidence of:

  • Gross mismanagement of an agency contract or grant relating to covered funds
  • a gross waste of covered funds
  • a substantial and specific danger to public health or safety related to the implementation or use of covered funds
  • an abuse of authority related to the implementation or use of covered funds; or
  • a violation of law, rule, or regulation related to an agency contract (including the competition for or negotiation of a contract) or grant, awarded or issued relating to covered funds

Protected disclosures under the ARRA include those made by an employee to the newly created Recovery Accountability and Transparency Board, certain federal government officials, and state or federal regulatory or law enforcement agencies. However, the Act’s protections also apply to internal disclosures made to “a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct).”

An employee who believes he or she has been subjected to a reprisal prohibited by the ARRA’s whistleblower provisions may file a complaint with the inspector general for the agency from which the employee’s employer receives stimulus funds. The inspector general will then investigate the complaint unless he or she determines that the complaint is frivolous, does not relate to covered funds, or another federal or state judicial or administrative proceeding has previously been invoked to resolve the complaint. If the inspector general does investigate the complaint, he or she must provide a report of the findings of the investigation to all parties involved, including the appropriate federal agency heads. Note that the Act does not specify a statute of limitations for the filing of a complaint.

An employee who files a complaint of retaliation under the ARRA’s whistleblower provisions has a relatively low burden of proof. The employee need only demonstrate that he or she made a protected disclosure of information, and that disclosure was a contributing factor in the employer’s reprisal. Moreover, the Act specifies that this burden may be met by the employee’s use of circumstantial evidence, including “evidence that the official undertaking the reprisal knew of the disclosure; or evidence that the reprisal occurred within a period of time after the disclosure such that a reasonable person could conclude that the disclosure was a contributing factor in the reprisal.” Upon the employee’s demonstration that the disclosure was a contributing factor in the employer’s reprisal, the burden then shifts to the employer to establish, by the much higher standard of clear and convincing evidence, that the action would have been taken regardless of the employee’s disclosure. In the event the employee prevails, the appropriate agency head may grant the employee reinstatement, back pay, lost benefits, compensatory damages, and costs and attorneys’ fees.

If the agency head issues an order denying relief in whole or in part, has not issued an order within 210 days after the submission of a complaint, or decides not to investigate or to discontinue an investigation, the employee may bring a de novo action against the employer in federal district court. If the employee is granted relief by the agency head, the employer may appeal the decision in the federal court of appeals for the circuit in which the alleged retaliation occurred.

School districts should note that whistleblower protection rights under the ARRA “may not be waived by any agreement, policy, form, or condition of employment, including by any pre-dispute arbitration agreement,” with the exception of an arbitration provision contained in a collective bargaining agreement. Additionally, the ARRA requires covered employers to post a notice of employee whistleblower protection rights and remedies under the Act.

In light of the ARRA’s new whistleblower protections, school districts will want to evaluate whether they are subject to the Act. Those who qualify as covered employers under the new law should reexamine their internal complaint procedures, ensure that all employee complaints are taken seriously and promptly investigated, and take appropriate corrective action when necessary. Finally, school districts should proceed cautiously when taking any adverse action against an employee who may have made a disclosure of information entitling the employee to protection under the ARRA. This is particularly important, given an employee’s low burden of proof under the Act, which allows a complainant to demonstrate retaliation by temporal proximity of an adverse action to a disclosure of information or mere knowledge of the disclosure by the individual undertaking the reprisal.

If you have questions regarding the information in this article please contact your Davis & Kuelthau attorney.