Employer Guide to Whistleblower and Workplace Retaliation Laws

Small businesses can seem like families. When there is a disagreement or dispute, there is a temptation to handle it within the company rather than turn to outsiders for help. An employee seeking outside help can leave the employer or business owner feeling angry or betrayed. Small business owners, just like big companies, may want to retaliate against a whistleblower or complainant.

But federal law prohibits workplace retaliation, especially against whistleblowers. Employers must take employee complaints about workplace discrimination or harassment seriously. They must also avoid doing anything that appears to attack who filed the complaint. 

What is a Whistleblower?

A "whistleblower" is any employee or former employee who reports a company's mismanagement to outside authorities. A whistleblower isn't someone within the company who reports harassment to a supervisor. They are also different from an insider who leaks trade secrets to a competitor.

Whistleblower reports can lead to further investigations by outside agencies. Some government agencies have whistleblower hotlines. The hotlines encourage employees to report known or suspected violations. The government created whistleblower protection acts associated with the agencies. They protect workers who make these reports.

Whistleblower Protection Laws

Many state and federal regulatory agencies depend on whistleblowers within companies. They help kickstart their investigation processes. Laws protect private businesses from government scrutiny, just like individuals. Unless someone inside makes a complaint, agencies have no grounds for investigating.

Companies engaged in fraud or other illegal activities may want to retaliate against employees who report them. Because of this, government agencies have robust whistleblower protections for workers who come forward.

• The Occupational Safety and Health Administration (OSHA) oversees workplace safety and working conditions. Its Whistleblower Protection Program gives support and protection for reporters in various situations.
• The Securities and Exchange Commission (SEC) enforces violations of financial regulations, securities fraud, and insider trading. The Office of the Whistleblower protects whistleblowers from retaliation and adverse actions intended to prevent reporting.

Qui Tam Suits

This refers to a possible penalty facing employers who defraud the government. Qui tam actions allow private people to begin legal action if they know that their employer is defrauding the government. This includes whistleblowers. Some laws that have qui tam provisions include:

• The Sarbanes-Oxley Act protects and gives financial incentives to whistleblowers who report crimes to the SEC.
• The False Claims Act allows whistleblowers to file claims on behalf of the government and receive up to 30% of any award.
• The Dodd-Frank Act offers protection and rewards of sanction money to whistleblowers.

State Whistleblower Protection Laws

Most states have laws protecting individuals who report violations of state laws. Most whistleblower provisions cover fraud involving state Medicare or related public health programs. Antiretaliation laws protect people who file discrimination or harassment claims against their employers.

Filing an employment discrimination claim is not the same as whistleblowing. The law protects both activities and prevents reprisals or retaliation against reporters.

Retaliation Defined

The U.S. Equal Employment Opportunity Commission (EEOC) handles employee reports of harassment and discrimination. According to the EEOC, there are three elements to a workplace retaliation claim:

1. Protected activity: In this case, the protected activity is filing a complaint about harassment, discrimination, or a hostile work environment that management has not fixed. State laws make any action against whistleblowers illegal retaliation.
2. Adverse action: Adverse action can be directly job-related, like firing, demotion, reassignment, or negative job evaluations. They can also be "materially adverse" acts to the employee. Materially adverse acts include unpleasant working conditions, giving too much or too little work, or reassigning work to other employees.
3. Causation: This is when there's proof the employer took the adverse action because the employee engaged in the protected activity. Proof can be direct or circumstantial.
   

These definitions apply to anyone who participates in the complaint and investigation as well as the initial filer. For instance, employees interviewed by the EEOC about a harassment complaint cannot be retaliated against. Threats of possible retaliation for complying with an investigation ("I don't want to hear about anyone talking to the EEOC investigators!") are also not permitted.

Protected Activities and Adverse Actions

Although protected activity is easy to define, adverse action is not. Wrongful termination is itself unlawful. Even in at-will states, employers can get in trouble for firing employees if the termination is due to:

• Disability or a request for reasonable accommodations for a physical or mental disability (Americans With Disabilities Act)
• Request for unpaid leave to care for a family member or recover from a serious medical condition (Family and Medical Leave Act)
• Age if over 40 (Age Discrimination Act)
• Race, religion, gender, national origin, sexual preference, or orientation (Title VII of the Civil Rights Act, other state laws)

Whistleblower statutes protect any employee or former employee who files a claim of harassment or discrimination. Anti-retaliation policies prevent employers from disregarding claims they deem false or punishing workers for speaking up.

Types of Adverse Actions

According to the EEOC, retaliation is the biggest cause of complaints. It is a major factor in discrimination claims among federal employees, which likely holds for businesses in general. The EEOC has found, in many cases, that the original claim by a worker failed to uncover any grounds for the complaint, but the retaliation claim did. In other words, the employee had made an unfounded claim, but the retaliation led to actual discrimination.

Intentional retaliation comes after an investigation. This can look like an employer deliberately changing the employee's work status for the worse after a complaint. Being the subject of an EEOC investigation can be humiliating for large and small businesses. If the claim is unfounded, it's natural to be angry. However, owners and managers must resist the temptation to strike back at employees who filed a complaint.

Unintentional retaliation occurs when an employer tries to be helpful and instead makes matters worse. For instance, an employee complains about sexual harassment from a supervisor. The employer decides it would be best to move the employee to a new location during the investigation. By focusing on the complainant rather than the alleged wrongdoer, the employer creates the appearance of retaliation.

Retaliatory actions can be direct actions against the employee or participant. They can include:

• Firing, even with other cause, if not thoroughly documented
• Demotion or reassignment, especially if the demotion comes with a pay cut
• Cutting hours or job responsibilities
• Negative performance reviews

Courts have also ruled that materially adverse actions are also retaliatory. These can be things like:

• Moving a worksite to a less desirable location
• Giving the employee too much or too little work or unrealistic deadlines
• Micromanaging, like stopping by their desk or worksite to "see how they're doing" or excessive check-ins via Teams or email.

These materially adverse actions are retaliatory if the employee believes they are being carried out to force them to quit. Notice that some of them fall under the unintentional retaliation category. You may believe your worker would be happier in a different location away from where the harassment occurred. But that is not always how the employee sees it.

Avoiding Retaliation Claims

The easiest way to avoid initial harassment and subsequent retaliation claims is by having a good employment policy. All new workers should receive it during onboarding as part of their employee handbook. Even small businesses should have a handbook, even if they don't have a human resources department. You can find guidelines for writing employee handbooks online at FindLaw or by other HR professionals.

One section of your handbook should explain your harassment policy and how to report claims. For instance, you can provide the contact information if you want an employee to report directly to your HR department. If you have a form you want workers to use, it should be readily available in the break room or other common areas.

Another important section should explain workplace discipline. Your employees must know what will trigger a poor performance review and what steps disciplinary action goes through. Employees should always be able to access their personnel files.

A clear policy manual is good for both you and your employee morale. Your workers cope with situations better knowing what is acceptable and what is not.

When You Receive a Complaint

If you receive a complaint, whether an initial complaint of harassment or a claim of retaliation, your best course is to have a policy against retaliation. Your policy should cite state laws and applicable federal statutes. It should also describe your policy for reporting and investigating complaints. In addition:

• Take all complaints seriously: This does not mean you must believe every complaint is true. But it does mean you must investigate to find the truth of the matter.

• Keep all complaints confidential: Let employees know that any complaints made will be private. Only investigators should have access to information. In a small company, you may want to have outside help with your investigation.

• Keep records of all complaints: Keep documents on your full investigation, even if it is unfounded. If there are future legal proceedings, you will need a paper trail of what you did and who you spoke with.

Workplace Retaliation Issues? Get Help From an Employment Lawyer

You're probably confused and even angry if you're dealing with a whistleblower claim. It's critical you put your emotions aside and handle the claim correctly to ensure there is no retaliation claim. Legal help may be necessary. An employment law attorney can help you navigate this complex situation with precision and care. 

Contact a local employment law attorney to learn how to protect yourself, your business interests, and your employees.