Apr 21, 2009

Stimulus Bill Includes Whistleblower Provision to Protect Employees Who Report Their Non-Federal Employers for Improper Use of Stimulus Funds

When President Obama signed the American Recovery and Reinvestment Act of 2009, he authorized the release of hundreds of billions of taxpayer dollars into the economy. Perhaps sensing that not every recipient of this assistance would spend its money wisely or honestly, the Act includes a whistle-blower provision that protects employees who report their non-Federal employers for improperly using stimulus funds.

As set forth in Section 1553 of the Act, the whistle-blower law protects employees of “any non-Federal employer receiving covered funds” who disclose what they reasonably believe is evidence of (1) gross mismanagement of an agency contract or grant related to covered funds; (2) a gross waste of covered funds; (3) a substantial and specific danger to public health or safety related to the implementation or use of covered funds; (4) an abuse of authority related to the implementation or use of covered funds; or (5) 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. The law provides no definitions for “gross mismanagement” or “gross waste,” although it defines “abuse of authority” as “an arbitrary and capricious exercise of authority by a contracting official or employee that adversely affects the rights of any person, or that results in personal gain or advantage to the official or employee or to preferred other persons.” Notably, there is no requirement that the employee’s disclosure be made in writing.

Where a covered employee has participated in protected conduct, his or her employer may not discharge, demote or otherwise discriminate against him or her in retaliation for that activity. Generally, the employer violates this law if the employee’s protected activity was a “contributing factor” in the adverse employment action. On the other hand, no violation can be found where the employer proves, by “clear and convincing evidence,” that it would have taken the same action in the absence of the employee’s protected disclosure.

An individual seeking recourse for allegedly unlawful discrimination must first initiate administrative proceedings by submitting a complaint to the appropriate inspector general. Again, there is no specific requirement that the complaint be made in writing. The inspector general would subsequently issue a written report regarding the complaint to the appropriate government agency, and that agency would then issue a ruling in favor of, or against, the complainant.

Where the government agency finds in favor of the complainant, the agency must do one or more of the following: (1) order the employer to take affirmative action to abate the discrimination; (2) reinstate the complainant with backpay and compensatory damages; and/or (3) order the employer to pay the complainant the total amount of all costs and expenses that the complainant reasonably incurred in bringing the complaint, including attorney’s fees. On the other hand, where the agency either fails to conduct or complete the investigation or determines that the complaint of discrimination is without merit, the complainant would have a right to a jury trial in federal court.

To learn more about the whistle-blower provision, please be sure to contact your employment counsel at Smith, Gambrell & Russell, LLP.

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