Labor Day: No justice for whistleblowers

Another Labor Day. Another day when there is no justice for thousands of whistleblowers. Over the past four years, numerous bills have been languishing in Congress designed to close loopholes and end delays faced by whistleblowers who report frauds or life-threatening safety violations. Despite numerous bipartisan bills being introduced, Congress has yet to act on any major whistleblower fix. This Labor Day needs start a process where the cynicism towards whistleblowers comes to an end, and Congress does it job.  

What needs to be done?

Confirm Members to the Merit Systems Protection Board (“MSPB”). Since 2017 the MSPB has sat idle, unable to vote on any whistleblower case simply because Congress has failed to confirm any new members to the Board. The MSPB, which currently has no members is the primary agency with authority to enforce employment rights for federal employees, including the Whistleblower Protection Act. As “60 Minutes” reported, thousands of federal employees cannot obtain any justice, literally because there are no officials able to rule on their cases. President Biden has now nominated all three members, but the Homeland Security Committee (which must initially approve the nominations) has yet to schedule a hearing. Consequently, thousands of federal employee whistleblowers continue to be denied their rights, even those like former Army Corp of Engineer’s whistleblower Toni Savage, who won her case, but cannot obtain any justice until the Board issues a “final order.” She has been waiting for over five years.

Fix the Anti-Money Laundering (AML) Act.  Money laundering is among the worst corporate crimes — facilitating tax evasion and permitting dictators and drug dealers to hide their ill-gotten gains. Last year, Congress took a timid first step in enacting rights for AML whistleblowers. But the statute was shot so full of holes that it would make a Mafia hit man envious. The law excluded all employees who work at FDIC insured institutions from anti-retaliation protections.  Although the law permits “rewards,” it allocated no money to pay them, and thereafter gave the secretary of Treasury the right to deny payment to fully qualified whistleblowers, regardless of what they have suffered. Numerous members of Congress have recognized the problems in last year’s law, and momentum is growing for a realistic fix. 

Defend COVID-19 Whistleblowers. In a cruel twist of fate, hospital workers who treat coronavirus patients, along with other employees forced to work in hazardous conditions, have some of the worst whistleblower protections. Under federal law if you are retaliated against for objecting to working in conditions that violate CDC guidelines, you have to file your complaint within thirty days to the Department of Labor (“DOL”). Even if you meet this crazy deadline you still have no federal rights to pursue your case. You have to ask the DOL to file a claim on your behalf. If they do not, you automatically lose.  No job, no back pay and no rights. Obviously DOL cannot file a lawsuit on behalf of every worker illegally fired, so the vast majority of workplace safety whistleblowers are left out in the cold. The statistics on these cases speak for themselves. In 2020 the DOL issued determinations in 2137 cases. They issued “merits” findings in support of employees in only 20 cases. In the past, leaders from the DOL urged Congress to fix the law. They must continue to demand common sense reforms. 

Fund the Commodity Whistleblower Program. As part of the Dodd-Frank Act, Congress enacted whistleblower protections for employees who reported frauds in multi-trillion dollar commodity exchange and “swaps” markets. This law covers crimes such as insider trading, market manipulation, bank secrecy violations, virtual currency frauds, and foreign bribery. Since Dodd-Frank became law, whistleblowing under the Commodity Exchange Act exploded, uncovering billions in corrupt oil trading violations, price fixing, foreign exchange manipulation, and other frauds impacting numerous consumer products.

Unfortunately, Congress did not fully fund the commodity program, and this year it nearly went bankrupt, despite record-setting enforcement actions.  A bipartisan group of Senators, led by Sens. Charles Grassley (R-Iowa) and Maggie Hasssan (D-N.H.) are trying to address these problems — they need the support of the American people to make sure this critical program is not undermined. 

Stop the “Repeal by Delay” of the IRS Whistleblower Program. In 2006, Congress passed a strong tax whistleblower law. The results were immediate. Swiss bankers turned in U.S. tax cheats, and billions in fines were collected. But the good times quickly came to an end. Like the commodity program, the tax whistleblower program was effectively repealed by economic starvation. The IRS Office of the Whistleblower simply does not have the needed resources. On the average it takes the IRS ten years to process a whistleblower case. The Whistleblower Office reported that numerous whistleblowers have died before their award claims could be paid. Grassley and Sen. Ron Wyden (D-Ore.) introduced S-2055, a bill to fix delays and solve other problems, including protecting the right to remain anonymous. That law should be passed immediately. 

Pass the False Claims Act Reforms. During the debate over the infrastructure bill, it was widely assumed that Congress would pass S-2428, a badly needed reform to ensure that the highly successful False Claims Act qui tam whistleblower law can hold government contractors accountable. Since it was first amended in 1986, this law has proven to be America’s most successful anti-fraud law. Whistleblowers have directly recovered over $46.5 billion from fraudsters, the vast majority of all government fraud recoveries. A group of bipartisan senators, including Grassley, Patrick Leahy (D-Vt.), Dick Durbin (D-Ill), Roger Wicker (R-Miss.) and John Kennedy (R-La.) proposed amending the law to stop the growing practice of government contractors using a judge-made technicality to defeat valid claims.  

This technicality permits corrupt government contractors to escape liability even if they knowingly violated the law, arguing that the violation was not “material.” It was widely expected that this badly needed amendment would pass with overwhelming support. Instead, the government contractor lobby — looking to spend taxpayer dollars as part of the infrastructure legislation, undertook a massive blitzkrieg attack, and stripped whistleblower protections from the trillion-dollar package. But some members of Congress and public interest groups are fighting back, and plan to continue to push this critically needed amendment.  

Enact Whistleblower Protection for Climate Change and Wildlife Trafficking. Last term, Congress, with strong bipartisan support, and with universal support from the leading non-profit groups fighting to protect the rainforests, fisheries, and endangered species, introduced a whistleblower bill that would solve the problems facing employees who desire to report these crimes. It is modeled on the highly successful Dodd-Frank Act, and would establish the right to anonymously report illegal deforestation, IUU fishing and wildlife trafficking. The bill needs to be reintroduced and quickly passed. Extinctions last forever. 

There is no justification for Congress’ failure to act on these whistleblower laws. The Marist Poll found that over 85 percent of the American people wanted stronger protections for whistleblowers, with overwhelming support from both Democrat and Republican voters. In the same poll 81 percent of “likely voters” wanted increased whistleblower protections to be a “priority” in Congress, with over one in four likely voters demanding increased protections as an “immediate priority.” The American people, in a unified and bipartisan manner, want stronger whistleblower laws. Congress needs to act now.

Stephen M. Kohn is a partner in the whistleblower law firm of Kohn, Kohn and Colapinto and the Chairman of the Board of Directors of the National Whistleblower Center.