BHGR Newsletter: Economic Stimulus Law Protects Whistleblowers

May 2009

Employers who receive economic stimulus federal funds, and those who contract with businesses who receive such funds, should be aware of broad new whistleblower protection given to their employees. The American Recovery and Reinvestment Act of 2009 (the "ARRA") says that employees who believe their employer is misusing, mismanaging, or wasting ARRA funds can report the conduct to the government or law enforcement. The ARRA prohibits employers from retaliating against any employee who makes such a report, and allows employees who believe that they were subject to a reprisal such as a demotion, termination, or discipline, to make a complaint to an inspector general of the governmental agency that disbursed the funds at issue. The inspector general must then investigate the complaint and find either that retaliation occurred or that the complaint was frivolous or did not apply to covered funds. If retaliation is found, the federal governmental agency can order that the employer take action to correct it, including reinstating the employee, compensating the employee for back pay or lost benefits, and paying for the employee's attorneys' fees.

If the agency decides not to take any action, then the employee can file a civil lawsuit against the employer for money damages or other relief. The ARRA provides a low threshold for employees to prove that the employer retaliated against them, and an employee can prove his or her claim by showing that his or her disclosure was a "contributing factor" to the reprisal. The employee can meet this test by showing that the employer knew of his or her report or that the reprisal occurred within a short period of time after the report. An employer can dispute the employee's allegation by showing, through "clear and convincing evidence," that it would have taken the same action with respect to the employee even absent the employee's report. Employers covered by the ARRA must post a notice in their workplace to inform employees of their rights under the law.

Given the new whistleblower protection available under ARRA, employers who receive economic stimulus funds from the federal government, or who contract with recipients of the funds, should exercise caution when facing the prospect of having to discipline an employee who previously reported the misuse of ARRA funds.

If you are confronted with a similar situation, we are available to advise you on the merits of a potential whistleblower claim. Our attorneys have extensive experience in advising clients of their options, as well as trying whistleblower and retaliation claims. Should you have any questions, please contact one of our attorneys in the Employment Law Practice Group.

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