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When Lockheed Martin Corp. sought to set aside a decision that essentially determined that they violated the Sarbanes-Oxley Act (the Act), the Tenth Circuit ruled against them, affirming the decision of an administrative law judge (the ALJ).
Andrea Brown was a former Lockheed Martin employee who lodged an ethics complaint against Wendy Owen, vice president of communications at Lockheed in Colorado Springs. Brown communicated concerns of fraudulent and illegal activity wherein Owen had developed sexual relationships with several soldiers in Iraq, was sending them sex toys, bought a laptop for one of them, and even booked fancy hotel rooms to meet them when they returned home to the states. These communications were allegedly occurring through an employee pen pal program.
Lockheed, in return, shut down the pen pal program and Owen’s position in the company was not affected.
The Tenth Circuit agreed with the ALJ that Brown was subsequently constructively discharged for actions that are protected under the Act. Specifically, Section 806, protects whistleblowers for employees of publicly traded company, and states that no employee of such comapny may be discharged because of any lawful act done by the employee.
Instead of protecting Brown for her reports on Owen, the Tenth Circuit saw that she was constructively discharged -- that is, forced to resign. A director who was allegedly on good terms with Owen told Brown that her position was uncertain. Also, her performance ratings were lower, and there was a job posting on Lockheed's website for Brown's exact position. The ALJ also accepted as credible Brown's account of Owen calling her, mocking her and telling her to get her resume together.
When Brown's position was replaced by a new hire, she was told to vacate her office and to work from home or use the visitor's office, which doubled as a supply room. She was also told she could not attent an annual communications conference and that her leadership position was going to be removed. Brown then fell into a deep depression after an emotional breakdown and had to take a medical leave.
The ALJ agreed that Brown had suffered materially adverse employment actions and that her reporting Owen, a protected activity, lead to the constructive discharge. She was awarded $75,000 in back pay, medical expenses, and other compensatory damages.
The Tenth Circuit found no error in the Board's decision, and unanimously affirmed. They also ordered a reinstatement of Brown in an appropriate position, even if the position no longer exists. The matter was remanded to make those determinations.
Bottom line: protect your whistleblowers, Lockheed.
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