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Whistleblower reforms turn tide against employers

Posted On: May. 31, 2015 12:00 AM CST

Recently finalized federal rules make it simpler for employees to file complaints when they raise workplace safety issues and are subjected to retaliation.

Rules that the U.S. Occupational Safety and Health Administration finalized in March allow filing of retaliation complaints by workers under 22 federal laws.

Employer actions that can spark whistleblower complaints include demotions, layoffs and firings. And major points of the rules now allow employees to make their complaints verbally in person or over the phone; include the requirements to “economically reinstate” laid-off or fired workers who are party to an investigation; and greater employer disclosures to whistleblowers.

Employers found by OSHA to have violated its whistleblower rules, such as Union Pacific Railroad (see related story), face fines and requirement such as training supervisors and adopting policies that are not considered retaliatory.

“This is another signal from the Department of Labor and OSHA that the agency is becoming more friendly to whistleblowers,” said David J. Marshall, a partner at Washington-based law firm Katz, Marshall & Banks L.L.P., which represents whistleblowers.

“Employees who turned to OSHA for justice were not being treated fairly by OSHA,” he said, “and OHSA's (past) procedures favored employers.”

In addition, even companies outside of industries subject to the Sarbanes-Oxley Act could be held liable if they contract with companies that are subject to OSHA's rules.

“The rules apply to a wider swath of employers, those who never thought they'd be in the gun sight of OSHA,” said R. Scott Oswald, managing principal of Washington-based The Employment Law Group P.C., which represents whistleblowers. “These are new rules every employer ought to become familiar with.”

“OSHA is encouraging people to come forward,” Mr. Oswald said. “It's safe to say these rules are employee-friendly from start to finish.”

The rules make permanent interim rules OSHA had in place since 2011, said Anthony Rosa, Washington-based deputy director of OSHA Directorate of Whistleblower Protection Programs.

“The agency feels comfortable with the new regulations,” he said.

Several organizations had argued that some of the new rules are unfair to employers.

For example, the Washington-based Society of Corporate Secretaries and Governance Professionals argued the economic reinstatement requirement is unfair for employers who prevail in a OSHA whistleblower retaliation investigation. Allowing oral complaints may be unnecessary since most are filed by “sophisticated professionals,” Darla Stuckey, the society's senior vice president of policy and advocacy, wrote in earlier comments.

The nonprofit Washington-based Equal Employment Advisory Council also objected to allowing oral employee complaints.

“Requiring a written complaint emphasizes the gravity of invoking federal statutes protection, and thus discourages frivolous complaints,” Jeffrey Norris, president of the advisory council, wrote in earlier comments.

Both organizations could not be reached for comment following formal imposition of the new rules.

Mr. Oswald praised OSHA's transparency concerning employer statements, which previously were made in private.

“Misstatements can now be used against employers later on,” he said. “There are now consequences for employers. These statements are under oath, supplied to the complainant.”

Tom Hams, Chicago-based managing director and national practice leader of employment practices liability insurance at Aon Risk Solutions, said there are more opportunities than ever for employers to get roped into a whistleblower retaliation suit — even in cases that a manager might not perceive as retaliatory.

To help handle what he predicts could become a major issue for employers, Mr. Hams suggests that employers retrain managers to understand what an employee could feel is a form of retaliation.

“Not inviting somebody who has made a complaint to lunch is an example,” Mr. Hams said. “When it's a softer issue, that is less likely to be perceived as retaliation by a manager ... Those are the ones that can get you.”

He also suggests employers review their employment practice liability insurance coverage.

“There will be more findings of liability in cases that OSHA investigates,” Mr. Marshall said.

“The only way employers can minimize their liability for whistleblower retaliation and encourage employees to come forward with issues that need correction is to ensure that the avenue for employee reporting of safety and compliance is an open one that leads to understanding and investigation of the matter, rather than retaliation against the whistleblower,” he said.

“These whistleblowers, in alerting the government to violations at their companies, are often protecting the safety of employees as well as saving the government from wasteful spending and safeguarding investors. We need people to feel protected when they do the right thing for the public,” said Kevin Seely, a San Diego-based partner at Robbins Arroyo L.L.P.