The 7th Circuit just decided an interesting case, and one that the National Whistleblower Center heralds as a “landmark ruling.” In Deguelle v. Kristen J. Camill, et al. (7th Cir. Dec. 15, 2011), the court held that retaliation against a whistleblower who reported a tax fraud scheme involving his employer S.C. Johnson & Sons, Inc., can be a predicate act under RICO (Racketeer Influenced and Corrupt Organizations Act).
The decision has many interesting legal implications and nuances. But bottom line, protections for whistleblowers are expanding.
What caught my eye were the facts (or assumed facts) that the court relied on when making its ruling, and who was sued personally.
Company Lawyer and HR Professionals Names Personally in the Lawsuit
Plaintiffs didn’t just go after the company that allegedly did them wrong, they also went after individuals who were involved in alleged fraudulent and retaliatory acts. In this case, Deguelle named:
- Kristen J. Camill, Director of Human Resources
- Gayle Kosterman, Executive Vice President, Worldwide Human Resources
- Robert Randelman, Vice President and Corporate Tax Counsel
- Daniel Wenzel, Global Tax Counsel
It’s a lesson for everyone who deals with a whistleblower—regardless of your level in an organization or job title. It’s critical to get great legal counsel involved early to help guide you (the stakes are really too high to go at it alone).It’s also vital to be incredibly thoughtful about the decisions your organization makes, and how they may be perceived by the employee who is on the receiving end. Offering a settlement package or a raise if the employee will drop his claims may later be thrown back at you as evidence of witness tampering and retaliation.
Whistleblowers are often motivated by a belief that they are doing the right and moral thing by pursuing their claims. When they perceive that an organization has crossed them or mistreated them, the situation often turns personal. It’s important to keep that in mind at all times.
The Decision is Legally Significant - But the Facts are Revealing
No doubt, when it comes to alleged fraudulent activity, emotions can run high on both sides. A manager or decision-maker who feels attacked or cornered is likely to react in some very predictable (and human) ways; and these reactions, left unchecked, are likely to expose an organization and individuals to some significant potential liability.
According to the plaintiff in Deguelle, he was subjected to a series of retaliatory acts (some at the hands of managers and others by the HR director) that included the following:
- Bad performance reviews (despite previous strong performance)
- Negative comments
- Denial of a pay raise
- Claims of hostile work environment
- Instructions to engage in further improper conduct
- Confrontational and aggressive behavior
- Instructions not to bring information to anyone but the manager
- Terminating his employment
- Filing a lawsuit against him
- Spreading defamatory statements about him to the media
I encourage you to read the first 10 pages of the decision. I guarantee you it will be insightful. Ask yourself how might your managers respond if they were on the receiving end of a complaint?
The law on retaliation is constantly evolving. Innovative theories will always be in play, new laws will be passed, and current laws will be relied on to expand legal protections for whistleblowers. The current explosion in retaliation claims is not going away.
So it’s time to get proactive. In 2012, employers are planning to increase their communication and training to all employees and managers about retaliation. In Deguelle, had the alleged tax scheme been reported earlier, the situation might have turned out very differently for everyone involved.
We can no longer assume that employees understand their duty to report, or that managers fully understand their obligations to effectively receive complaints, act quickly and prevent retaliation. Gone are the days of handing out a policy and asking (or hoping) that managers can bring it to life by sharing it with their employees. In this new era of heightened whistleblowing and retaliation risk, dedicated and habitual Reporting & Retaliation training is a business imperative.
ELT’s legally engineered™ Whistleblowing, Reporting & Retaliation course, created in close collaboration with Littler, does just that. This newly released course is designed to bolster your internal compliance program and:
- Educate employees about your organization’s values
- Teach employees about your policies and their obligation to report suspected misconduct internally
- Teach employees how to report suspected misconduct
- Teach managers about handling complaints and preventing retaliation
- Help establish important legal defenses