Quick Answers
Whistleblower retaliation refers to any adverse action taken against an employee for reporting illegal or unethical activities in the workplace. Common forms of retaliation can include demotion, harassment, termination, threats, reduction in pay or hours, or denial of benefits. Federal and state laws protect whistleblowers from retaliation and provide legal recourse if it occurs. Employers can face significant penalties and damages if found guilty of whistleblower retaliation.
What is a whistleblower?
A whistleblower is an employee who reports an employer’s misconduct. Specifically, whistleblowers disclose activities that are illegal, unethical, or harmful to the public interest. Common misconduct reported by whistleblowers includes:
- Fraud
- Embezzlement
- Bribery
- Corruption
- Financial misrepresentation
- Workplace harassment or discrimination
- Violations of environmental, health, or safety regulations
- Manufacturing defects
- False claims
Whistleblowers may report misconduct internally to management or human resources. They can also report externally to regulatory agencies, law enforcement, or the media. Whistleblowers take substantial personal and professional risks when disclosing misconduct. As a result, many laws exist to protect whistleblowers from retaliation.
What is whistleblower retaliation?
Whistleblower retaliation refers to any adverse action taken by an employer against an employee for engaging in legally protected whistleblowing activity. Protected whistleblowing includes:
- Reporting misconduct to supervisors, compliance officers, human resources, or through internal reporting procedures
- Cooperating with internal or external investigations related to the misconduct
- Refusing to participate in the misconduct
- Testifying in proceedings related to the misconduct
- Reporting violations externally to regulatory agencies, law enforcement, or legislators
- Discussing misconduct with coworkers
If an employer takes adverse action against an employee for any of these protected activities, it constitutes illegal retaliation under whistleblower protection laws.
Types of Retaliation
Some common forms of retaliation against whistleblowers include:
- Termination or firing
- Demotion or denial of promotion
- Discipline or suspension
- Reduction in pay, hours, or benefits
- Blacklisting or negative employment references
- Reassignment to less desirable positions or locations
- Increased scrutiny and undeserved negative performance reviews
- Loss of job duties and responsibilities
- Exclusion from meetings and communications
- Denial of work tools, resources, or information needed to perform job
- Harassment, humiliation, threats, or intimidation
Basically, any negative employment action intended to punish, marginalize, or force out an employee for whistleblowing is retaliation under the law. Even if retaliation seems minor at first, it often escalates over time.
Laws Protecting Whistleblowers from Retaliation
A number of federal and state laws exist to protect whistleblowers from retaliation and provide legal recourse if it occurs. Some key laws include:
Federal Laws
- False Claims Act (FCA) – Protects whistleblowers reporting fraud against the government. Covers federal contractors, healthcare providers, and any entity receiving significant federal funds.
- Dodd-Frank Wall Street Reform Act – Protects whistleblowers in the financial industry reporting violations of securities, commodities, and financial regulation laws.
- Sarbanes-Oxley Act (SOX) – Protects whistleblowers at publicly traded companies reporting securities fraud, accounting/auditing violations, or concealing illegal activities.
- Whistleblower Protection Act (WPA) – Protects federal employees reporting violations of laws, mismanagement, waste/abuse, health/safety matters, or censorship concerns.
- Occupational Safety and Health Act (OSHA) – Protects whistleblowers reporting workplace safety or health threats.
State Laws
Most states have their own whistleblower protection laws covering private sector employees. State laws vary but typically prohibit retaliation for disclosing or objecting to illegal activities. Some states protect both internal and external whistleblowing to entities like law enforcement. Others only protect internal reports made to management.
Common Protections
In general, whistleblower protection laws:
- Prohibit employers from retaliating against employees for protected whistleblowing
- Allow employees to file retaliation complaints with administrative agencies like OSHA or the Department of Labor
- Enable employees to recover reinstatement, back pay, benefits, and other damages
- Create civil and criminal liability for employers who engage in retaliation
However, whistleblowers must follow certain procedures like reporting violations in a timely manner to qualify for protection. Discussing initial concerns with an attorney can help navigate rights and responsibilities under various laws.
Proving Whistleblower Retaliation
Employees who experience retaliation can file a legal claim under applicable whistleblower laws. To prevail, the employee typically needs to prove:
- They engaged in legally protected activity by reporting misconduct or violations
- Their employer was aware of the protected activity
- They suffered a negative employment action that harmed them
- Their protected activity was a contributing factor in the adverse action
This creates a rebuttable presumption of unlawful retaliation. The burden then shifts to the employer to show clear evidence that they would have taken the same adverse action even without the protected activity.
Common evidence used to prove whistleblower retaliation includes:
- Documentation of performance reviews and disciplinary records showing a change after whistleblowing occurred
- Proof that management knew about the protected activity prior to taking adverse action
- Records of increased scrutiny, baseless complaints, or differential treatment compared to coworkers
- Suspicious timing between the whistleblowing and retaliation
- Evidence of pretext or shifting explanations for the adverse action
- Proof that reasons given by employer are false or did not actually motivate the retaliation
In some cases, testimony about harassment, threats, or statements made to the whistleblower after the protected activity can help demonstrate retaliation.
Damages in Whistleblower Retaliation Cases
If an administrative agency or court rules in favor of the employee, the remedies and damages can include:
- Reinstatement – Getting rehired into the previous job or an equivalent position.
- Back pay – Wages, overtime, and benefits lost due to termination, demotion, or suspension.
- Front pay – Future expected lost earnings if reinstatement is not feasible.
- Litigation costs and attorney fees – Compensation for expenses incurred in bringing the retaliation claim.
- Compensatory damages – Payment for emotional distress, reputational harm, and other losses.
- Punitive damages – Punishment and deterrence in cases of egregious or reckless retaliation.
Government agencies can also impose sizable fines and civil penalties against employers found guilty of retaliation. For example, OSHA can issue penalties up to $250,000 per violation.
Notable Whistleblower Retaliation Cases
Here are some high-profile whistleblower retaliation cases:
HealthSouth Corp
Finance executive Aaron Beam blew the whistle on $2.7 billion in accounting fraud at HealthSouth. The company fired him the next day. Beam sued and initially won $500,000 in damages. After appeals, he ultimately settled for $117,500 plus legal fees. HealthSouth paid over $100 million to settle shareholder lawsuits related to the fraud.
UBS
Former investment banker Bradley Birkenfeld disclosed illegal offshore banking practices at UBS. He served prison time but was later awarded $104 million by the IRS whistleblower program for his role in recovering unpaid taxes. However, UBS allegedly blacklisted Birkenfeld after he reported the misconduct. He filed a whistleblower retaliation complaint with OSHA in 2016.
Actavis
Sales executive John Kopchinski exposed illegal promotion of dementia drug Namenda at Actavis. The company forced him to resign shortly after raising concerns. Kopchinski sued and won an $11.4 million jury award in 2019. Actavis also paid $300 million to settle DOJ charges related to off-label marketing of Namenda.
DirecTV
Attorney Phillip Ray filed a False Claims Act lawsuit against DirecTV for deceiving the FCC to receive benefits. The company allegedly fired him for reporting the misconduct. Ray sued and won more than $1.8 million in damages for whistleblower retaliation.
| Case | Whistleblower | Misconduct Reported | Retaliation | Damages |
|---|---|---|---|---|
| HealthSouth Corp | Aaron Beam | Accounting fraud | Firing | $117,500 |
| UBS | Bradley Birkenfeld | Illegal offshore banking | Blacklisting | $104 million from IRS |
| Actavis | John Kopchinski | Off-label marketing | Forced resignation | $11.4 million jury award |
| DirecTV | Phillip Ray | Deceiving FCC | Firing | $1.8 million |
Preventing Whistleblower Retaliation
The best way for companies to prevent whistleblower retaliation claims is to create a culture that welcomes reporting of misconduct. Effective programs and policies for protecting whistleblowers include:
- Strong non-retaliation policies that are well-communicated to employees
- Leadership engagement and tone at the top emphasizing ethical compliance
- Confidential hotlines or helplines for anonymous reporting of concerns
- Timely investigations of all reported misconduct or violations
- No tolerance approach for threats, harassment, or abuse of whistleblowers
- Ongoing training for managers on retaliation red flags and responsibilities
- Protections and remedies for whistleblowers experiencing retaliation
- Rewards or public recognition for whistleblowers who come forward
- Designated ombudsperson outside managementhierarchy to protect whistleblowers
By establishing a supportive, open environment for whistleblowing, companies can substantially reduce the risk of retaliation claims as well as the underlying misconduct issues.
Conclusion
Whistleblower retaliation remains a significant occupational hazard across industries and various types of wrongdoing. Robust legal protections now exist to safeguard whistleblowers from reprisals. Employers who engage in retaliation often face severe reputational damage, fines, and costly litigation. Preventing retaliation through ethical culture and responsiblecompliance programs represents the most prudent path for responsible businesses. With proper training and policies, the rights of conscientious employees to speak out can be protected while also cultivating workplace integrity.