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January 19, 2024

Federal and state laws protect whistleblowers from retaliation.

As a business owner, manager, or HR worker, you may already know this and might even appreciate the positive role that whistleblowers can play in promoting workplace equity and ethics.

What may be less clear is how whistleblower protections operate in the workplace and what happens if those protections aren’t honored.

When a whistleblower feels that their legal rights have been violated through unlawful retaliation, they could file a lawsuit against you. Knowing what these claims allege and how to respond to them is critical to protecting your business and reputation.

Who Are Whistleblowers?

Broadly speaking, a whistleblower is any person who observes an unsafe, illegal, or unethical practice in the workplace and reports the matter to a higher authority, such as a government agency or even an internal superior. In reporting such activities, the whistleblower is often concerned with their or their fellow employees’ physical safety or legal liability.

Whistleblowers are often employees of the business they report on, as these workers are intimately familiar with the company’s inner workings. However, there is no legal distinction between an internal whistleblower and an external one — both enjoy protections under the law.

Similarly, whistleblowers enjoy legal protection regardless of whether they make themselves known or try to remain anonymous.

Protection Against Whistleblower Retaliation

To encourage whistleblowers to come forward and report unlawful practices, the law grants protection against whistleblower retaliation. “Retaliation” is defined as any adverse employment action taken against a whistleblower and can include the following consequences.

Termination of Employment

One of the most extreme examples of whistleblower retaliation is terminating the whistleblower’s employment.

Like most other states, California is an “at-will” employment state, meaning either the employer or employee can terminate the working relationship at any time and for any reason.

Nonetheless, it’s illegal for an employer to fire an employee because they acted as a whistleblower.

Job Demotion

An employer may not demote an employee in retaliation for their whistleblowing activities.

Demotion doesn’t only mean putting the employee in a lower-paying position, although a reduction in pay can qualify as whistleblower retaliation. An unlawful demotion could also entail reassigning the employee to a less desirable shift or removing certain duties from their role.

Workplace Harassment and Intimidation

Finally, protections against whistleblower retaliation also mean employers can’t harass or intimidate a whistleblower or permit others to do so. A whistleblower shouldn’t be made to suffer cruel or derisive comments, face exclusion from workplace functions and activities, or otherwise be subjected to a hostile work environment.

What Happens When a Whistleblower Believes They’ve Been Targeted for Retaliation

If one of your employees believes they’re the victim of whistleblower retaliation, they don’t need to bring the matter to your attention before filing a claim. In other words, the first indication you might have that the employee believes they were retaliated against could be the complaint itself. Employers should also explore whether their insurance policy or policies provide any coverage.

Discovery

Once you receive a complaint, you’ll have an opportunity to issue a formal response. Following your response, you can expect a period of discovery to take place.

During the discovery process, the whistleblower will demand that you produce evidence they believe can help prove their claim. Consequently, it’s important to preserve the following documents when you receive a complaint alleging whistleblower retaliation:

  • The whistleblower’s employee file and its contents
  • Communications you and your staff have had about the whistleblower report and the employee themselves
  • Any performance reviews of the whistleblower, both before and after the report was made
  • Any other evidence relating to the subject of the whistleblower report and how you responded to it

If you’re not sure whether to preserve something, err on the side of caution and hold onto it until you’ve had a chance to speak with an employer defense attorney. Destroying evidence pertinent to a whistleblower retaliation lawsuit can result in negative inferences being made about you and your business.

Settlement Negotiations

Settlement negotiations often take place before the claim proceeds to trial. Settlements in whistleblower lawsuits are designed to give the whistleblower some compensation or address the harm they’ve suffered while allowing both parties to avoid the expense and inconvenience of trial.

While you don’t have to settle the whistleblower’s claim, you should at least explore this option with your attorney. Even in cases where you don’t believe you’ve done anything wrong, a settlement can have certain practical benefits, such as saving you time, money, and bad publicity.

Court Trial or Arbitration

If a settlement can’t be reached, the whistleblower may decide to take their claim to court or arbitration.

If this happens, they’ll have the initial burden of showing that they were subject to unlawful whistleblower retaliation. Specifically, they must show that they suffered some adverse employment action motivated by the fact that they made a whistleblower report. They’ll need to prove that this allegation is more likely than not true.

You have a right to respond to the whistleblower’s allegations, and it’s generally advisable to do so.

As part of your response, you’ll want to correct any factual errors or misunderstandings the whistleblower made in their complaint. If there was a lawful reason for their termination or demotion, such as poor job performance, you could present evidence showing this was the case.

The goal is to show that any adverse consequences the whistleblower experienced were unrelated to the report they made. The burden then shifts back to them to rebut your evidence. If they do so successfully, they may be entitled to damages such as back pay, lost benefits, and other economic and non-economic damages.

Whistleblower Retaliation Lawsuits Should be Taken Seriously

No matter how frivolous you think a whistleblower’s retaliation claim is, resist the urge to toss the lawsuit aside or ignore it. Failing to respond promptly and appropriately to such a lawsuit could result in your business being ordered to pay hefty damages. You could also face other consequences from state or federal authorities for your actions.

The first step in responding to a lawsuit should be to discuss the matter with a skilled employer defense lawyer. Your attorney can guide you through the process of responding to the suit and help you take appropriate action.

Seek Legal Guidance Today

Take immediate action to protect your business. Contact an experienced employer defense lawyer at Pearlman, Brown & Wax, LLP for expert assistance with whistleblower retaliation lawsuits. Safeguard your company’s reputation and financial well-being by consulting with our legal experts. Act now to ensure the best possible defense and guidance regarding whistleblower retaliation.

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