Date: Aug 08, 2008
The Consumer Product Safety Improvement Act of 2008 (CPSIA), which is awaiting the signature of the President as of this writing, imposes sweeping changes to current product safety laws that will affect all consumer product companies that manufacture, distribute, import or sell consumer products. Click here to see Keller and Heckman's alert on CPSC Reauthorization Legislation Expected To Pass. In addition, it provides significant new whistleblower protections to employees of manufacturers, private labelers, distributors or retailers who engage in one or more of the following types of protected activities:
· Providing the employer, the federal government, or a state attorney general with information relating to any violation of a legal requirement enforced by the Consumer Product Safety Commission (CPSC or Commission), or any act or omission that the employee reasonably believes to be a violation ;
· Assisting, testifying or otherwise participating in a proceeding regarding the alleged violation; or
· Refusing to participate in any activity, policy, practice, or assigned task that the employee reasonably believes to be in violation of a legal requirement enforced by the Commission.
The foregoing definition of "protected activity" is very broad and could encompass any internal or external employee complaint that deals with consumer product safety issues. An employee who engages in protected conduct and thereafter is subjected to any form of adverse job action -- including but not limited to denial of a pay increase or promotion, undesirable job assignment or transfer, or disciplinary action or discharge -- may charge the employer and its agents with unlawful retaliatory conduct. If successful, the employee would be entitled to affirmative relief (directing the employer to correct the retaliatory conduct), make-whole compensation, attorney's fees, and potentially even punitive damages.
The whistleblower provisions seem to be a solution in search of a problem. No evidence was put forward during discussions on the bill about abuses leading to disciplinary action or terminations against employees who reported product safety violations. The final legislation also excludes CPSC employees from its reach and places jurisdiction over product safety whistleblower complaints with the Department of Labor (DOL), not the CPSC as originally envisioned.
Administrative Complaint Procedures
To pursue a claim under the CSPIA, an employee must file an administrative complaint with the U.S. Secretary of Labor within 180 days of the alleged unlawful retaliation, identifying the person or persons responsible for the alleged retaliation (respondents). However, under certain conditions, described below, complainants may move the case to federal court where they can demand a jury trial and seek an award of punitive damages up to $250,000 – which are not available at the agency level.
Historically, the Occupational Safety and Health Administration (OSHA) has been delegated responsibility for investigating whistleblower complaints brought under health and safety, environmental and securities regulation statutes, and will probably be the DOL division charged with investigating CPSIA whistleblower complaints. Upon receipt of the complaint, DOL will provide respondent(s) with written notice of the filing of the complaint and the substance of the allegations and supporting evidence. Respondent(s) will also be provided an opportunity to submit a written response contesting the complaint and an opportunity to meet with a representative of the Secretary to present witness testimony.
Following an investigation, the Secretary will issue written findings. If the agency determines that there is reasonable cause to believe that protected activity was a contributing factor in the adverse employment decision taken against the complainant, and the employer is otherwise unable to prove by clear and convincing evidence that it would have made the same decision regardless of the protected activity, then the Secretary may order that the complainant be reinstated and paid compensatory damages and attorney's fees and costs. Conversely, should the agency conclude that protected activity was not a contributing factor to an adverse employment action, and/or that the respondent would have taken the same action regardless of protected activity, the agency will dismiss the complaint.
Within 30 days following notification of the Secretary's written findings, either the complainant or the respondent(s) may file written objections and request a hearing on the record before an Administrative Law Judge (ALJ). An employer's request for a hearing does not stay the Secretary's reinstatement order. Therefore, if the employer does not comply with the preliminary reinstatement order immediately, it is subject to a suit for enforcement of the Secretary's order in the federal district court where the violation allegedly occurred or in the District of Columbia, and may not challenge the underlying determination of the Secretary in that proceeding. The employer will be required to prevail in a final DOL order in order to have the preliminary reinstatement order lifted, and may or may not be able to recover wages and other benefits paid to the employee during the DOL appeal process despite successfully defending the appeal.
DOL has promulgated rules of procedure in discrimination and whistleblower cases that provide for extensive pre-trial discovery and motions practice. Thus, whistleblower cases proceed before the ALJ much as discrimination cases would in federal district court, including written discovery and depositions, subject to sanctions for the failure to comply. Following the merits hearing, at which witnesses testify under oath and are subject to cross examination, the ALJ must issue a recommended decision and order containing findings of fact and conclusions of law. The decision of the ALJ becomes the final agency decision unless appealed to the Administrative Review Board (ARB) within 30 days. The ARB is the final step in the appeal process within DOL. Thereafter, the losing party may take an appeal to the appropriate U.S. Court of Appeals.
A complainant may elect to terminate DOL proceedings on a CPSIA whistleblower claim any time after the complaint has been pending for 210 days, or within 90 days following the issuance of a preliminary determination, provided there is not yet a final decision. The court may grant injunctive relief and compensatory damages, including reinstatement, backpay with interest, and compensation for "special damages" sustained as a result of the discharge or discrimination, including litigation costs, expert witness fees and reasonable attorneys fees.
Significantly, under the CPSIA Congress has explicitly extended whistleblower protections to personnel whose duties normally include performing any of the enumerated kinds of protected activity. In the absence of clear Congressional intent to the contrary, the ARB and the U.S. Court of Appeals for the Federal Circuit have routinely interpreted other whistleblower statutes to exempt internal investigators, auditors and quality control technicians from the class of protected employees on the theory that to include them would dissuade employers from engaging in self-monitoring activity for fear of being sued for every adverse employment decision rendered against such internal "policemen." By expressly sheltering this class of employees, Congress has ensured a surge in whistleblower and retaliation claims in the consumer product safety area.
The whistleblower provisions of the CPSIA confers new rights on employees at all levels of the consumer product distribution chain. As a result, the whistleblower provisions of the CPSIA will likely affect an enormous universe of employers, beyond even those affected by Sarbanes-Oxley and other statutes that recognize a whistleblower right. Affected employers should provide training to managers and supervisors regarding the provisions of the CPSIA and the proper procedures for responding to employee complaints. This should include evaluating and updating internal procedures for acting on reports of incidents, injuries or other issues related to consumer products. Employers should also review and update their policies to ensure that they include: (1) a complaint procedure for handling product safety complaints related to its consumer products; (2) a complaint procedure for handling claims of retaliation related to consumer product safety complaints; (3) prohibitions against retaliation for making a CPSRA complaint with sanctions up to and including discharge for engaging in retaliation; (4) a system that requires management personnel to provide employees with regular feedback and performance evaluations so that justification for an adverse action unrelated to possible complaints about product safety is properly documented; and (4) a system for reviewing adverse employment actions to ensure adequate documentation and the absence of retaliatory motives. Experience teaches that employers who take such measures reduce the incidence of successful whistleblower claims and are otherwise better positioned to defend such claims when they occur.
 The Secretary enjoys similar authority under the whistleblower provisions of the Surface Transportation Assistance Act. (Respondents in Sarbanes-Oxley whistleblower cases have successfully contested enforcement of preliminary orders of reinstatement based on an absence of an express grant of jurisdiction in the district courts to enforce a non-final agency order.)