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WHISTLE-BLOWING DELENA HURST A S S I S TA N T AT T O R N E Y G E N E R A L DELENA.HURST@ARKANS AS AG.GOV Arkansas Whistle-Blower Act • Ark. Code Ann. § 21-1-601, et seq. • A public employer shall not take adverse action against a public employee because the employee communicates in good faith to an appropriate authority: • A violation or suspected violation of law OR • A waste of public funds Arkansas Whistle-Blower Act 3 Definitions Whistle-blower: An employee who witnesses or has evidence of a waste or violation and who communicates in good faith or testifies to the waste or violation to a superior, an agent of the employer, or an appropriate authority, prior to any adverse action by the employer. Appropriate authority: Any governmental agency having jurisdiction over law enforcement, regulatory violations, professional conduct or ethics, or waste. Adverse action: Discharge, threaten, or otherwise discriminate or retaliate in any matter that affects the employee’s employment. Definitions Communicate: Give a verbal or written report. Violation: An infraction or a breach, which is not merely technical or minimal, of a state statute or regulation or of a code of conduct or ethics. Waste: A conduct or an omission which results in substantial abuse, misuse, destruction or loss of funds, property, or manpower. Civil Action An employee must file a lawsuit within one hundred eighty (180) days after the occurrence of the alleged violation. Burden of proof: The employee must prove by a preponderance of the evidence that he has suffered an adverse action because he engaged or intended to engage in a protected activity. Good faith An employee does not need to actually prove that there was a violation of law or waste. A communication only needs to be made in good faith. Good faith = A reasonable basis in fact for the communication of the existence of waste or of a violation. No good faith = the employee has no personal knowledge of a factual basis for the communication or the employee knew or reasonably should have known the communication was malicious, false or frivolous. Affirmative Defense • An employer shall have an affirmative defense if the adverse action taken against the employee was due to employee misconduct, poor job performance, or a reduction in workforce unrelated to a protected communication. • The employer has the burden of proving by a preponderance of the evidence the existence of the employee’s misconduct unrelated to the protected communication. Remedies Two remedies: 1) Injunctive relief 2) Actual damages – fringe benefits, retirement service credit, lost wages, benefits, other remuneration If a plaintiff wins, he can be awarded reasonable costs and attorneys’ fees. This award can be substantially more than the judgment itself. State of the Law • Not much guidance. The Arkansas Supreme Court has not formulated a standard or framework for reviewing the proof in whistle-blower cases. • Courts have interpreted the statute very broadly. • Today, Arkansas case law merely requires that an employee must establish that he suffered an adverse action because he engaged or intended to engage in an activity protected by the Act, and that the adverse action was unrelated to his own misconduct or poor job performance. Barrows v. City of Fort Smith, 2010 Ark. 73. • Other jurisdictions have adopted the McDonnell-Douglas test in their whistle-blower cases. The Arkansas Supreme Court has yet to adopt or reject this approach. Potential Defenses Legitimate, Non-Retaliatory Reason for Termination • Affirmative defense • Employer’s burden • Hollis v. Fayetteville School District No. 1 of Washington County, 2015 Ark. App. 544 – In the absence of any evidence from an employee showing pretext, the testimony that the employee was terminated for insubordination was sufficient to establish the employer’s affirmative defense and summary judgment was proper. Potential Defenses No Actual Violation of Law or Waste • The Act only protects two types of reporting. • This defense is that the purported act or omission by the employer is not actually a violation of law or waste. • Sullivan v. Coney, 2013 Ark. 222, 427 S.W.3d 682 (2013) – Mayor's order to the police chief to arrest a person violating a zoning ordinance was not a violation of law, and therefore the police chief's report to a city attorney of the order was not action protected by the Whistle-Blower Act. Potential Defenses No Temporal Proximity • The Act has a causation requirement. • However, there is no Arkansas case law addressing the temporal proximity issue. • Other jurisdictions have addressed temporal proximity: • 7th Cir. – 4 months not enough to establish causation • 8th Cir. – 2 months not sufficient • 10th Cir. – 3 months not close enough Potential Defenses Violations/Waste Are Insubstantial and Trivial • The Act requires that the violations of law or waste be “substantial.” • However, there is no Arkansas case law providing guidance on what is substantial vs. insubstantial. • Circuit courts have not been inclined to address this issue at the summary judgment level. Scenario 1 Facts: • An employee is a nurse who is on duty at a mental health hospital when a patient dies. She tells the administrator in passing, “if I had an IV, I could have saved him.” • There is no law that mental health hospitals must have IVs. • 13 months later, the hospital discovers that the nurse was violating a hospital policy dealing with patients and terminates her. Questions: • Is the communication protected under the Act? • Is there a causal relationship between the communication and the termination? • Is there a Whistle-blower Act violation here? Scenario 1 Actual case: • Employer argued that there was no actual violation of law and that there was no temporal proximity so no causation. • Motion for Summary Judgment was denied. • Jury found in favor of the nurse and awarded her $40,000 for lost wages. • Attorney’s fees awarded for $273,000. Scenario 2 Facts: • The employee’s job is to raise grant money for the state agency. • She complains that her supervisor lets people take off-the-books comp time and that there are errors in draft budget records. • A few months later, she is terminated because she raised no money for the agency for approximately a year. Questions: • Is the communication protected under the Act? • Is there a causal relationship between the communication and the termination? • Is there a Whistle-blower Act violation here? Scenario 2 Actual case: • Motion for Summary Judgment was denied. • Jury found in favor of plaintiff for $127,000. • Attorney’s fees awarded for $200,000. • Juror called afterwards and said they were divided 8-4 in favor of the plaintiff, but one juror for the defendant switched his vote simply because it was late Friday night and he wanted to go home. Lessons Learned • Whistle-blower cases are on the rise. • Plaintiffs’ attorneys are adding whistle-blower allegations to employment cases because the law is so favorable to them. • Trial courts are very hesitant to grant summary judgment on whistle-blower claims. • Juries may find in favor of employees for any number of reasons unrelated to the elements of a whistle-blower claims. • Juries have sympathy for the argument that the employer has done something wrong (even if unrelated), because everyone has either been fired or knows someone who has been fired when they believe the termination was not warranted. Case to Watch Johnson v. Butler, Case No. CV-15-480 Argument: Article 5, § 20 of the Arkansas Constitution expressly prohibits the General Assembly from waiving the State’s sovereign immunity in the Whistle-blower Act. Two special justices have been appointed to replace Justice Brill and Justice Goodson, who have recused. Case finished briefing in October, but has not yet been submitted. Tips Don’t punish an employee for making a complaint. Be honest on employee evaluations. If you are going to fire someone, make sure you’re following the rules yourself. Even if the employee commits a terminable offense, ask yourself, how will it look? Would termination be fair? Have other employees been treated the same way? When terminating an employee, make sure it’s documented well and honestly. Questions? 800.482.8982 [email protected] AGLeslieRutledge AGRutledge AGLeslieRutledge ArkansasAG AGRutledge Attorney General Leslie Rutledge