Defense Contractor Whistleblower Protection Act Could Impact Alabama Employers

Defense Contractor Whistleblower Protection Act Alabama Employment Law
The Defense Contractor Whistleblower Protection Act could impact many employers in Alabama.

Alabama employers need to know about the Defense Contractor Whistleblower Protection Act, 10 U.S.C. § 2409.  Off the top of my head, I can identify major military bases at Redstone Arsenal, Maxwell Air Force Base and Fort Rucker.  Private defense contractors will be an integral part of each such base.  Moreover, many of my defense contractor clients based in Huntsville have employees outside Alabama.  Thus, they need to be aware of this Act.

In short, the Whistleblower Protection Act protects employees from retaliation if they make complaints about violations related to Department of Defense or NASA contracts, or dangers to public safety.  More particularly, the Act provides:

(1)An employee of a contractor, subcontractor, grantee, or subgrantee or personal services contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph (2) information that the employee reasonably believes is evidence of the following:

(A) Gross mismanagement of a Department of Defense contract or grant, a gross waste of Department funds, an abuse of authority relating to a Department contract or grant, or a violation of law, rule, or regulation related to a Department contract (including the competition for or negotiation of a contract) or grant.

(B) Gross mismanagement of a National Aeronautics and Space Administration contract or grant, a gross waste of Administration funds, an abuse of authority relating to an Administration contract or grant, or a violation of law, rule, or regulation related to an Administration contract (including the competition for or negotiation of a contract) or grant.

(C) A substantial and specific danger to public health or safety.

10 U.S.C. § 2409(a)(1).  The list of persons/entities to whom an employee can complain is extensive.  See 10 U.S.c. § 2409(a)(2).  Most importantly, employees are protected if they make an internal company complaint to a “management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address misconduct.”
There have only been a handful of trial court cased dealing with the Whistleblower Protection Act.   Even so, one of those case was issued by Judge Abdul Kallon in the Northern District of Alabama late last year.  See Devillo v. Vision Centric, Inc., No. 5:15-cv-02211-AKK, 2017 WL 3425465 (N.D. Ala. Aug. 9, 2017).
For any lawyers reading this, there is a slight divergence of authority on the proper method for analyzing Whistleblower Protection Act claims.  Judge Kallon followed the lead of other District Court judges and applied the traditional burden-shifting scheme for retaliation claims arising under Title VII of the Civil Rights Act.  But, recently, Magistrate Judge Michael Hegarty in Colorado found that the Whistleblower Protection Act contained a statutorily-mandated analysis, which he summarized as follows:
[An employee] will succeed on his claim for retaliation in violation of 10 U.S.C. § 2409 if he demonstrates (1) he engaged in protected activity as described in the statute, (2) the [employer’s] decision maker knew he engaged in protected activity, and (3) his protected activity was a contributing factor in the adverse employment action taken against him, unless (4) [the employer] shows by clear and convincing evidence that it would have taken the employment action despite [the employee’s] protected activity.
Cejka v. Vectrus Sys. Corp., No. 15–cv–02418–MEH, 2018 WL 879522 at *14 (D. Col. Feb. 14, 2018).

ERISA Retaliation: More Limited Than Other Statutes

ERISA whistleblower retaliation Alabmaa Employment Law
ERISA Whistleblowers Have Limited Rights

Employees who are fired for complaining about abuse of their retirement benefits under ERISA have fewer rights than workers who complain about violations of other laws. See Atkins v. Greene County Hospital Board, No. 7:16-cv-00567-LSC, 2017 WL 6383183 (N.D. Ala. Dec. 14, 2017).  Marilyn Atkins was employed by Greene County Hospital, which allowed her to participate in a defined benefit pension retirement plan through the Retirement Systems of Alabama.  The hospital deducted retirement contributions from the paychecks of all full-time employees like Atkins, and put those funds into the Hospital’s general fund — from which general expenses were paid.

The Hospital was supposed to send the employee contributions to RSA “around” the tenth of each month, but almost never sent the payments within that time.  Moreover, some payments were delayed by as many as three months.  Atkins complained about the late payments to the Hospital’s CFO, and also made public complaints to the Hospital’s Board of Directors on October 20, 2015.  She was terminated from employment on October 29, 2015 for allegedly violating the Hospital’s “no call/no show” absence policy.

Ms. Atkins sued the Hospital claiming a breach of fiduciary duties under the Employee Retirement Income Security Act (“ERISA”) and for violating ERISA’s whistleblower protections.  On December 14, 2017, United States District Court Judge L. Scott Coogler dismissed Ms. Atkins’s claims.  Judge Coogler found that Ms. Atkins did not possess standing to sue for breach of fiduciary duty, and even if she did, she failed to prove her claims.

From an employment law perspective, Judge Coogler’s analysis of the ERISA whistleblower claims was more interesting.  He found that the anti-retaliation provisions of ERISA are not as extensive as those found in other federal statutes such as Title VII of the Civil Rights Act of 1964.  Those statutes protect employees who oppose, report or complain about unlawful practices.  In contrast, ERISA only protects persons who provide information in response to an “inquiry.”  Thus, Judge Coogler joined several other courts from around the country and found that employees are only protected by ERISA if they “participate, testify or give information in inquiries, investigations, proceedings or hearings.”  Ms. Atkins only complained internally at the Hospital, and she did not “participate, testify or given information in inquiries, investigations, proceedings or hearings.”  Therefore, Judge Coogler found that she did not possess an ERISA retaliation claim.

ERISA retaliation is a relatively rare claim.  Nevertheless, Judge Coogler has provided Alabama employers an additional weapon if they are sued for ERISA retaliation in the future.