Workplace Whistleblower



SEC Targets Employment Agreements Requiring Waiver of Whistleblower Awards

By: Cameron Smith, Cliff Fontstein, and Anshel Joel "AJ"  Kaplan
August 19, 2016

The SEC’s Office of the Whistleblower continues to examine employee severance, settlement and confidentiality agreements for language that might chill reporting of securities violations to the SEC and other regulators. The SEC announced on August 10, 2016 that BlueLinx Holdings, a building products distributor, will pay $265,000 to settle charges that its severance agreement violates Rule 21F-17 by requiring departing employees to forego whistleblower bounty awards and using confidentiality language that restricts reporting of possible securities law violations. The Order is available here.
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SEC Issues Near Record-Breaking Whistleblower Award

By: Cliff Fonstein and Meredith-Anne Berger
June 17, 2016

On June 9, 2016, the Securities and Exchange Commission announced it awarded over $17 million to an ex-employee of a financial services firm.  The SEC’s press release touts the award as the second-highest bounty ever handed to a whistleblower, bested only by a $30 million award from September 2014.  This recent award brings the grand total of whistleblower awards to over $85 million since the bounty program began in 2011 and adds to the already substantial sum of $2.5 million awarded since January 2016. 
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Federal Reserve Bank Ruled a Federal Supervisory Agency Under the BSA

By: Cliff Fonstein and Meredith-Anne Berger
May 31, 2016

In a case of first impression, a district court held that a regional Federal Reserve Bank was a supervisory agent as defined by the Bank Secrecy Act (“BSA”).  The BSA requires the reporting of any suspicious activity that may constitute a violation of tax, anti-money laundering, and other laws and contains expansive whistleblower protections.  The law prohibits discrimination or retaliation against employees that provide information to the “Secretary of the Treasury, the Attorney General, or any Federal Supervisory agency regarding a possible violation” of the BSA.  
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Financial Industry in the Hot Seat with Democrats' Proposed Bill Expanding Whistleblower Protections

By: Cliff Fonstein and Meredith-Anne Berger
March 15, 2016

Senator Tammy Baldwin (D-Wis.) and Representative Elijah Cummings (D-Md.) have co-sponsored a bill that streamlines and reinforces current whistleblower laws that affect Financial Service industry employers.  In case there is any doubt that Wall Street has a target on its back, the press release announcing the new law stated: “The middle class has paid a steep price for the irresponsible actions of others, yet only one top banker went to jail for the financial crisis.  If we strengthen and empower whistleblowers in the financial industry, we can do a better job of holding Wall Street accountable.  These reforms will help us do that.”  
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SEC Whistleblower Awards Continue, Including to Employees Who Provide Information After an Investigation Has Begun

By: Christopher F. Robertson and Samuel Sverdlov
March 11, 2016

As we have previously written, the Securities and Exchange Commission (“SEC”) has not slowed in its efforts to issue substantial awards to whistleblowers under the SEC whistleblower program created pursuant to Dodd-Frank.  As stated in Dodd-Frank, “if the information leads to an enforcement action that results in more than $1 million in monetary damages,” the SEC may issue an award.  Notably, whistleblowers are eligible to receive 10-30% of the monies collected, and the SEC additionally can “pay awards based on monetary sanctions collected by other authorities in actions that are related to a successful… enforcement action, and based on information provided by a… whistleblower.”  To assure the program would pay, Congress funded the program from inception so there would be no issue with financing awards.
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OSHA and FAA Sign Agreement on Protecting Airline Workers from Retaliation

By: Meagan Newman and Craig B. Simonsen
January 25, 2016

The Occupational Safety and Health Administration (OSHA) and the Federal Aviation Administration (FAA) recently completed a Memorandum of Understanding (December 1, 2015), which will permit the sharing of information under the anti-retaliation provision of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21), 49 U.S.C. § 42121.
AIR21 prohibits air carriers and air carrier contractors and subcontractors from firing or retaliating against airline workers who complain about violations of aviation regulations. Dr. David Michaels, in a December 23, 2015, press release, indicated that “airline industry employees have a right to speak out about unsafe workplaces and practices without fear of losing their jobs.” “Through this agreement with the FAA, we are reinforcing the message that silencing workers who try to do the right thing is unacceptable for workers and also unsafe for the public.”
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New Jersey Supreme Court Takes on Preemption of CEPA Whistleblower Claims

By: Christopher Lowe, Robert Szyba and Samuel Sverdlov
January 11, 2016

On Wednesday, January 6, 2016, the New Jersey Supreme Court heard arguments in Puglia v. Elk Pipeline, Inc., on whether claims under the New Jersey Conscientious Employee Protection Act (“CEPA”) were preempted by the federal Labor-Management Relations Act (“LMRA”).
The road to the Supreme Court. The plaintiff in Puglia was a laborer on a public works project.  After discovering that he was being be paid less than what was required under the New Jersey Prevailing Wage Act (“PWA”), he made numerous complaints to management, resulting in an increase in his pay.  As the project was winding down, however,  plaintiff was laid off purportedly due to lack of work.  Plaintiff commenced an action claiming  that he was laid off in retaliation for his complaints under the PWA, pointing to the fact that he had more seniority than certain employees who were not laid off.  The plaintiff’s employment, however, was governed by a collective bargaining agreement (“CBA”) between the employer and the plaintiff’s union, which contained a complicated seniority policy that takes into consideration both objective and subjective elements to determine an employee’s seniority. 
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SEC Whistleblower Report Shows Increase In Tips

By: Ada W. Dolph, Adam R. Young and Craig B. Simonsen
January 7, 2016

The Securities and Exchange Commission’s (SEC) Office of the Whistleblower (Office) recently released its 2015 Annual Report on the Dodd-Frank Whistleblower Program (Report) (November 16, 2015).
In Fiscal Year 2015 alone, the Commission paid more than $37 million to reward eight whistleblowers for their provision of original information that led to successful Commission enforcement actions with monetary sanctions totaling over $1 million; one whistleblower received over $30 million in a single award.  This flurry of awards followed the Commission’s active Fiscal Year 2014, in which the Commission authorized fourteen whistleblower awards and paid nine.  The Commission also registered a record year by issuing Final Orders or Preliminary Determinations on over 150 whistleblower award claims.
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Dodd-Frank Bounties Are Alive and Well - Both SEC and CFTC Issue Awards

By: Christopher F. Robertson and Samuel Sverdlov
December 21, 2015

The U.S. government has recently paid substantial awards when the Commodity Futures Trading Commission (“CFTC”)  awarded $290,000 to a whistleblower for providing valuable information about violations of the Commodity Exchange Act (“CEA”), and the Securities and Exchange Commission (“SEC”), awarded $325,000 for a “former investment firm employee who tipped the agency with specific information that enabled enforcement staff to open an investigation and uncover the extent  of the fraudulent activity.” 
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'Tis the Season for New Jersey CEPA and Gender Equity Notices

By: Ada Dolph, Christopher Lowe and Howard Wexler
December 17, 2015

It is once again that time of year when we remind our clients with operations in New Jersey of their obligation to distribute certain required notices to their employees.
First, those employers with 10 or more employees, regardless of whether those employees work in New Jersey or outside the state, must distribute annually (not merely post) the required notice under the Conscientious Employee Protection Act (CEPA). The CEPA Notice, which must be provided in both English and Spanish to New Jersey employees, can be accessed here. Please be sure to fill out the “Contact Information” section prior to distribution. This distribution may take the form of email, provided the subject employees typically have access to email in the course of their job duties. Otherwise, hardcopy distribution is required. 
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OSHA Recommended Practices for Employers for Preventing and Addressing Retaliation

By: Meagan Newman and Craig B. Simonsen
November 16, 2015

The Occupational Safety and Health Administration has published a draft document intended to “help employers” to develop a program to protect employees from retaliation when issues or concerns about workplace conditions or activities that could harm workers or members of the public are raised.
The draft, Protecting Whistleblowers: Recommended Practices for Employers for Preventing and Addressing Retaliation, the Agency believes, will assist employers in creating a “non-retaliatory environment” in the workplace by providing “practical guidance on protecting whistleblower rights for public, private, and non-profit employers.” The draft document contains sections on how to include leadership commitment, foster an anti-retaliation culture, respond to reports of retaliation, conduct anti-retaliation training, and monitor progress and program improvement.
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