Whistleblowing – Going It Alone or with Others

Whistleblowing – Going It Alone or with Others

Badger-like, I worked alone as whistleblower.  When I suspected legal violations at HomeFirst Services of Santa Clara County, I investigated and documented them.  I might have found support from Hilary, the Chief Program Officer, but I didn’t.  Cindy, the Chief Development Officer, might have encouraged me but didn’t.  I didn’t enlist anyone from my small accounting department.  When Jenny, the CEO, began attacking me, Board members I’d worked with for six years could have backed me, but no.  I carried on by myself.

That’s how most people see whistleblowers: solitary, brave (or, for some, wretched) warriors.  As individuals, they wrestle with the ethical questions of whistleblowing, and they suffer the retaliations. 

But whistleblowers often succeed with the support of others.   Famous Pentagon Papers leaker Daniel Ellsberg was aided by the far less famous Anthony Russo.  Those cases seem rare, though.  Of the 126 determination letters from California’s Department of Industrial Relations (DIR) in 2014, all but one describe single actors. 

In the exception, Godinez & Arellano v. Velasquez dba Curiosidadis, the two employees attended a labor commissioner’s hearing about Curiosidadis’s failure to provide meal/rest breaks and to pay overtime and minimum wages.  Immediately afterward, their hours were cut, forcing Godinez and Arellano to quit.  After not being paid properly by Velasquez, they apparently joined to complain to the State.  Then they teamed up again to complain about losing their jobs.  The DIR ordered Velasquez to pay them a total of just $4,007 and to pay a fine of $20,000.

Eileen Schuman, John Brock, and Susan Noe had worked for Lee County (Florida) for years when they participated in the audit of a $5 million contract award to a company owned by the wife of a County executive.  Proving the illegality of the County’s contract award was complicated and required the joint work of its finance officer, an analyst, and the compliance officer.  Four months after they talked to auditors they were dismissed because of budget restrictions, the County said.  Almost four years later, their combined settlement of $1.3 million seems near.

Like Godinez-Arellano and Schuman-Brock-Noe, Doreen Coburn, the interim senior VP of operations at Charter Oak Health Center in Connecticut, confided in authorities.  In December 2011, she told visiting the state inspectors about a patient with TB and two employees who had been infected.  But that by itself probably did not get Coburn and two of her subordinates fired.  After the visit, she wrote letters to Charter Oak’s president, its board of directors, and then to state oversight agencies.  When that didn’t yield the result she wanted, she turned to Fox News on February 3, 2011.  She and her employees were sacked three weeks later.  Coburn recently settled for $85,000, and the others received $35,000 and $10,000.

Whistleblowing is such a personal business, I wonder about motivations when people join with their bosses in revealing misdeeds.  We hear the bosses’ stories: Time Magazine Person of the Year Cynthia Cooper’s book describes the collapse of WorldCom, brought down with her disclosures and the assistance of her colleagues.  Cooper then found a successful career in speaking and consulting engagements.  Harder to learn, though, are the consequences for the now-forgotten who helped her.

More understandable, for me, are the whistleblowers in the Veterans Administration hospital system who united because of their commitment to serve veterans.  After trying internally to improve things, eleven doctors and medical staff in New Hampshire’s only hospital for veterans complained to the U.S. Office of Special Counsel about legal violations, mismanagement, and danger to public health – problems that included flies in the operating rooms and unsterilized surgical instruments.  In Cincinnati, 34 whistleblowers exposed performance problems at the VA Medical Center there.  Across the country, so many VA facilities have been accused of inadequate care and misreported wait times that a Facebook site, VA Truth Tellers, emerged to support their whistleblowers.

Some academics advise whistleblowers to improve their chances for success by finding help outside their organizations[1].  After contentious national debate about the war in Vietnam, Daniel Ellsberg, a government insider, could discuss his concerns with many in and out of government.  Michael Sandknop, who had contracted to provide video recording for the Missouri National Guard complained that he did not have the tools necessary to do his job.  Things spun out of control, and they fired him.  His whistleblower retaliation complaint went nowhere until he got Senators MacAskill and Grassley involved.  But contacting my Santa Clara County representative, State Congressional representative, and U.S. Senator did nothing for me.

Edward Snowden famously succeeded in publishing his discoveries by working with three journalists.  Less effectively, I contacted journalists at San Jose Mercury News, San Francisco Chronicle, and The Center for Investigative Reporting but got nothing for it.

I have read hundreds of stories describing diligent work by attorneys on behalf of their whistleblower clients.  Some, like Michele Gutierrez, achieved impressive results in short order.  But I fired my feckless attorney after five months of inaction and a disheartening settlement proposal.  He went on to run for Congress against Nancy Pelosi[2], and I turned, alone, to the Department of Industrial Relations.

Maybe my inability to get others involved in my project reflects the limitations of my nature.  Or maybe my case – even with allegations of $1.5 million of fraudulent government billings, the use of homeless men and women in unpaid work, among other charges – is too small to deserve public interest.  Whatever the cause, I am confined to my role as a small-time whistleblower.

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[1]For example, Glazer, Myron Peretz and Penina Migdal Glazer. The Whistleblowers: Exposing Corruption in Government and Industry.  New York: Basic Books, Inc. 1989; Johnson, Roberta Ann. Whistleblowing: When It Works and Why. Boulder: Lynne Rienner Publishers. 2003

[2] No great surprise: Stephen Jaffe’s campaign raised just $46,723 in the first six months of 2017.  Pelosi raised $1.4 million in the same period.

When Promises Fail to Protect – California’s Whistleblower Law (Part 2)

When Promises Fail to Protect – California’s Whistleblower Law (Part 2)

California’s Department of Industrial Relations (DIR) responds to employee retaliation complaints, including those that cited the State’s whistleblower law.  If the complainant successfully makes a prima facie case that there was retaliation, the company has the opportunity to convince the DIR that it acted against the employee for non-retaliatory reasons. 

Among the 126 determination letters from 2014 that the DIR provided to me, the most popular reason cited for firing the discloser was poor performance[1].  Nearly half the companies used it.  When HomeFirst’s CEO fired me, the first reason she gave was performance.  What else could it be? Why would a good performer be fired?  And this defense works: 84% of companies who tried it won.

The second most popular defense was an allegation of some sort of altercation – perhaps a verbal argument, a physical threat, intimidation, or insubordination (a special favorite that companies alleged 10% of the time).  HomeFirst tried that, too.  In addition to asserting that I had not done my job properly, HomeFirst leaned heavily on my supposed insubordination to justify my termination.  I was not courteous toward my boss, it said, and I had a negative attitude.  About 15% of the companies employed the altercation defense, which was successful 79% of the time. 

Like the poor performance defense, the altercation defense works because it makes intuitive sense: why should you not fire someone who is a threat to your business.  HomeFirst contended that instead of helping the company, I had hoped to undermine its viability.  The solution seems inarguable.

Two other common company arguments – the termination was part of a general layoff and the whistleblower actually resigned, which together accounted for 18% of the defenses – worked less reliably because they could actually be verified or not.  Still those defenses proved sufficient in 65% of the cases.

Only a quarter of the retaliation complaints addressed in the DIR’s 2014 determination letters were decided in favor of the employees.  Whistleblowers who dealt with wage-related issues won 33% of the time.  On the other hand, those who disclosed suspected legal violations succeeded just 6% of the time.  This is disturbing news for us “ethical whistleblowers,” but the letters shed light on why we seldom win.

The whistleblower who alleges a legal must take time to understand the technical intricacies of the law and business practices and to compile evidence in a convincing form.  During that delay, management has ample opportunity to suspect the traitor in its midst and to assemble its own evidence of the informer’s mistakes and failure to get along with other employees.  Managers can stage reprimands to which it can later point as proof that the whistleblower’s misbehavior was worse than its own. 

The passage of time also separates the whistleblower’s disclosure from the alleged retaliation.  Even with wage-related complaints, the DIR looks hard for a temporal connection between the two.  For example, over the course of six years Ty Horton had complained every few months about not being paid properly by Moule’s Foothill Glass.  Since he had not been fired for his earlier objections, the DIR decided that his final complaint did not cause his termination but his insubordination did, even if insubordination might be understandable given the company’s persistent screwing with his pay.

Sara Dowell began work as a direct care staff at Terra Bella Communities in December 2013.  In January and February 2014 she made several internal complaints about client care given by other staff members, and at the end of February she called California’s Community Care Licensing (CCL) Division about Terra Bella.  Unfortunately for her case, she should have called her complaint to the Department of Health Services, which she did on March 5, the day she was fired.  The DIR ruled against her, deciding there were too many, vaguely documented complaints for them to make a clear connection to her firing.  Instead, it felt a negative performance assessment was ample cause for her termination.

Charles Ramsey had held commercial loan officer positions at various banks for twenty years when he joined Exchange Bank as SBA [Small Business Administration] Credit Analyst and Underwriter in February 2010.  Exchange Bank did not operate as his prior experience indicated it should.  By November Ramsey decided to report what he thought were violations of FDIC regulations to the bank’s audit committee.  On December 1, he filed a complaint with the FDIC.  But his boss had begun accumulating criticisms of his job performance in June.  Ramsey was fired on December 21, 2010.

When employees complain about wage problems to company managers, they are afforded immediate protection.  Not so with legal issues in 2010.  The DIR held that his report to the audit committee did not merit protection based on then-existing law; discussions of possible infractions with his boss didn’t matter; only the FDIC report might have protected him.  When an employee begins to question organizational decisions, as Ramsey did, management is put on alert to begin building its defense.

Exchange Bank claimed that it had no idea of Ramsey’s FDIC disclosure, but it’s reasonable to suppose they had their suspicions.  At HomeFirst, just 13 minutes after I admitted having previously disclosed the company’s licensing violation to government authorities, the Board Chair told the CEO she was not surprised.  She had guessed as much following months of my urging action before the prior month’s visit by the same CCL that Dowell approached.

In March 2014, HomeFirst’s attorney advised Board members to fire me immediately after I acknowledged making disclosures to CCL and another government agency.  He said that a whistleblower suit would come even if they held off acting but I could cause harm with more disclosures in the interim.  Their delay did give me the chance to identify and reveal more potential violations, but it also allowed the CEO time to come up with reprimands they would cite as support for their decision.

Whistleblowers who approach the DIR generally present small-time problems that attract little public interest.  They fall on the far end of the spectrum from big-name whistleblowers and multi-million dollar qui tam lawsuits.  That they seldom reflect the deep ethical ponderings recommended by academic writers[2] does not make them unworthy of admiration.  Rather it casts the act of whistleblowing in the midst of ordinary life.

By opening consideration of whistleblowing to disclosures of relatively small misdeeds – in the general public’ view if not that of the affected individuals – we do not make the act less heroic.  But we find those who retaliate against them more reprehensible when they clearly stand for no high moral standard, however much they purport to do so.  They retaliate because they think they can get away with it, as indeed they often do.

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[1] Poor performance included a range of activities, such as failure to complete assignments, violations of policies, poor attendance, and theft

[2] For example, Bouville, Mathieu.  “Whistle-blowing and morality.”  Journal of Business Ethics.  81.3 (September 2008): 579-585; Bok, Sisella. “Whistleblowing and Professional Responsibility.” New York University Education Quarterly 11.4 (1980): 2-10; Johnson, Roberta Ann. Whistleblowing: When It Works and Why. Boulder: Lynne Rienner Publishers. 2003; Larmer, Robert A. “Whistleblowing and Employee Loyalty.” Journal of Business Ethics. 11.2 (Feb 1992): 125-128

When Promises Fail to Protect – California’s Whistleblower Law (Part 1)

When Promises Fail to Protect – California’s Whistleblower Law (Part 1)

Stories about whistleblowers in mainstream media tend to describe big cases.  Think of famous lawbreakers like Edward Snowden or the few individuals -- William LaCorte, for example -- who win huge lawsuits.  Employees of public agencies sometimes enter the news when their lawsuits threaten taxpayers’ pocketbooks.  Occasionally employees of private companies attract passing local interest if they stoke controversy involving a well-known institution, such as the Fine Arts Museums of San Francisco, but non-disclosure agreements work to keep their resolutions secret.

Other whistleblowers stay out of sight entirely after agreeing to private settlements like the one that HomeFirst offered me.  Finally, some file retaliation complaints with government agencies responsible for enforcing laws intended to protect whistleblowers.  In December 2014, I filed my complaint with California’s Department of Industrial Relations (DIR), which enforces California Code 1102.5.

The DIR issues annual Retaliation Complaint Reports to the California legislature describing its activities and opening a window on small-time whistleblowers and the techniques companies use against those who disclose their misdeeds.  The reports describe a growing business: in 2015 the DIR received 1,696 complaints per California Code 1102.5 versus 409 in 2013, just before the law was amended to protect internal disclosures of suspected misdeeds. 

In 2014[1] DIR issued 227 determination letters, which described the DIR’s decisions concerning complaints of retaliation.  Following my FOIA request for copies of those letters, the DIR sent me 156, the other 71 having been destroyed according to the DIR.  Among these 156, DIR investigations were briefly described in 126 of the letters, which appear to be fairly representative of California workers.  They came from nearly every industry, roughly in proportion with their participation in the overall California economy[2].   In addition, 10% of the complaints came from nonprofit employees, generally in line with the 8% of California employees working in the nonprofit sector[3].

The retaliation complaints came from small-time whistleblowers.  The 25% of claimants who were successful[4] received awards, on average, of less than $30,000.  We probably all think our case is uniquely significant, but mine fits into that pack nicely: if I had accepted HomeFirst’s settlement offer, I would have netted $24,000.

I am also similar to the others in that the DIR moves slowly for me, too.  On average, the DIR takes more than two years to decide the cases it accepts for consideration, and it has been working mine for more than two-and-a-half years so far.

Of the 126 alleged retaliations, 68% related to wage-related issues – such as not being paid at all, not being paid for overtime, not receiving meal or rest breaks, or participating in a State investigation of a wage issue.  Another 13% related to workplace safety problems.  Thus, nearly three-quarters of the whistleblowing here related not to abstract ethical questions, but to bread-and-butter issues that directly affected the whistleblowers.  Just 13% of the cases involved disclosures of other suspected legal misdeeds, like those I charged against HomeFirst, that might be viewed as unethical behavior without personal consequence.  We who approach DIR are not junior Snowdens or Ellsbergs, but ordinary people.

In order to be successful in her retaliation complaint under California law, the complainant must establish three things: (a) she disclosed[5] an employer’s action that she believed was illegal, (b) the employer knew about her disclosure, and (c) a connection can be demonstrated between her disclosure and the alleged retaliation.  After she has plausibly shown each of these – thus making her prima facie case – the employer will seek to prove that it had other non-retaliatory reasons for firing her.

The company’s first strategy, then, is to undermine the whistleblower’s contentions on these three points.  In its defense against my complaint, for example, HomeFirst stated that some of the deeds that I disclosed were not even illegal.  It admitted that I had made disclosures but said that my obligation as a company executive was to fix the problems, not merely disclose them to others.  Then it rephrased the requirements of California law, asserting that I could not prove that my termination was because of my disclosures (rather than that my disclosures were a contributing factor in its decision to fire me, as current law provides).

Cases involving wage issues, in particular, are usually clear cut: easily obtained documentation can show whether the individual was paid the right amount on time; and employees normally voice their complaints when they are not paid properly.  As a result, these whistleblowers did well in establishing their prima facie cases: 84% were successful at that first stage.

Legal infractions are more difficult to prove.  Of the 17 legal disclosures that were alleged to trigger retaliatory acts, 5 related to possible harm to clients of the companies.  Other alleged violations included misuse of government grant money, regulatory violations, illegal test proctoring practices, failure to monitor student visas, and orders to make false statements to government agencies.  Each of the legal disclosures involved technical understanding of detailed legal requirements and business practices.  The company might plausibly claim that no violation existed, it had nothing to gain from the alleged violation, and it had no reason to fire the individual for her so-called disclosure.  Consequently, a lower percentage of these complainants – 69% with legal-related complaints and of non-wage-related complaints in general – were successful in making their prima facie cases.

While, overall, 79% of the whistleblowers made their prima facie cases of plausible retaliation, those who did won just 31% of the time because their employers were able to convince the DIR that they had an even more plausible reason for firing the complainants independent of the whistleblowing.  Part 2 will discuss why companies are so successful before the DIR.

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[1] The DIR released its 2015 report only in the past few days.

[2] Summary derived  from U.S. Bureau of Labor Statistics and analysis of 2014 DIR determination letters.

[3] U.S. Bureau of Labor Statistics, 2012..

[4] The DIR’s 2014 Retaliation Complaint Report indicated that 21% of the 227 determination letters supported the complainant.  In addition, 401 cases were settled prior to issuance of a determination letter.

[5] Wage violations may be disclosed to the employer, but before the October 2013 amendment to California code 1102.5 most other violations had to be disclosed to a legal authority in order to merit protection.