American Contractors in Iraq

The McCaskill Amendment and the Economic Stimulus Bill:
Whistleblower Protections under the American Recovery and Reinvestment Act
of 2009

By Debra Katz
         
       The American Recovery and Reinvestment Act of 2009, signed into law by President
Barack Obama on February 17, 2009, provides an unprecedented  $787 billion federal
spending package with the intent of stimulating the flagging U.S. economy.  Congress has
included important provisions in the bill to ensure oversight and accountability of the
package’s $499 billion in spending and disbursement of American tax dollars.  Introduced
by Senator Claire McCaskill (D-MO), Section 1553 of the Act (the “McCaskill amendment”)
provides extensive whistleblower protections to ensure that the employees of private
contractors and state and local governments that receive stimulus funds are free to report
fraud, waste and other violations of the Act without fear of reprisal.

A. Who is Covered?

The purpose of the McCaskill amendment is to protect employees who do the right thing by
exposing corruption and speaking up about fraud, waste, and the abuse of stimulus funds.
Covered employers are non-Federal employers such as private contractors and state and
local governments that receive grants, contracts, or other funds made available or
appropriated by the Act.  Protected employees are any workers who perform services on
behalf of covered employers.  Unfortunately, whistleblower protections for federal
employees and members of the armed services are not covered under the Act.

B. What Activity Is Protected against Retaliation?

           Unlike whistleblower laws that concentrate primarily on complaints of fraud, such as
the Sarbanes-Oxley Act and the False Claims Act, the McCaskill amendment includes
protections that also address issues of mismanagement and waste.  Under the amendment,
covered employers may not retaliate against an employee who discloses information to the
Recovery Accountability and Transparency Board;  an inspector general; the Comptroller
General; a State or Federal regulatory or law enforcement agency;  the head of a Federal
agency, or their representatives; a court or grand jury;  a person with supervisory authority
over the employee (or person working for the employer who has the authority to
investigate, discover, or terminate misconduct);  or a member of Congress that the
employee reasonably believes is evidence of:

         1. Gross mismanagement of an agency contract or grant relating to covered funds;

         2. Gross waste of covered funds;

         3. A substantial and specific danger to public health or safety related to the
               implementation or use of covered funds;

         4. An abuse of authority related to the implementation or use of covered funds; or

          5. A violation of law, rule, or regulation related to an agency contract (including the
               competition for or negotiation of a contract) or grant awarded or issued
                related to covered funds.

          Protected disclosures also include “duty speech,” or disclosures made during the
ordinary course of the employee’s job duties.  

C. What Retaliation Is Prohibited?
        
          Prohibited retaliation is very broadly defined under the McCaskill amendment, which
states that potential whistleblowers cannot be terminated, demoted, or “otherwise
discriminated against” by covered employers as reprisal for the employee’s protected
disclosures.

D. How does a Potential Whistleblower Prove Retaliation?

         The burden of proof under the McCaskill amendment is quite favorable towards
employees, and employees need only demonstrate that their disclosure was a
“contributing factor” to their reprisal. The Amendment allows for the use of circumstantial
evidence, including evidence that the official behind the reprisal knew about the employee’
s disclosure or evidence that the reprisal occurred within such a timeframe after the
disclosure that would lead a “reasonable person” to conclude that the disclosure was a
“contributing factor” in the reprisal. In contrast, the employer has a higher burden of proof
to avoid liability and must demonstrate “clear and convincing” evidence that they would
have taken the same alleged reprisal action even if the employee had not made the
disclosure.

E. What Are the Available Remedies under the McCaskill amendment?

         If a potential whistleblower feels s/he has been retaliated against by their employer for
making a disclosure protected under the McCaskill amendment, the employee must file a
complaint with the appropriate inspector general.  As written, the McCaskill amendment
does not have a statute of limitations to file this complaint.  Unless the inspector general
determines that the complaint is frivolous, does not relate to covered funds, or another
Federal or State judicial or administrative proceeding has previously been invoked to
resolve such complaint, the inspector general will investigate the complaint and submit a
report of the findings to the employee, the employer, the head of the appropriate agency,
and the Recovery Accountability and Transparency Board no later than 180 days after
receiving the complaint.

1. Agency Relief

No later than 30 days after receiving the report from the inspector general, the head of the
appropriate agency shall determine whether the employer has subjected the complainant to
prohibited retaliation.  If there is sufficient basis to conclude that the employee did indeed
suffer an unlawful reprisal, the agency head can award relief to the complainant that
includes: reinstatement to their position with previous seniority and employment benefits,
compensatory damages and back pay, and attorneys’ fees and litigation costs.

2. Civil Action

In the event that the agency head issues an order denying relief in whole or in part, or fails
to issue a decision within 210 days of the filing of the complaint, the complainant shall be
deemed to have “exhausted all administrative remedies.”  As such, the complainant will
then be allowed to bring a de novo action against the employer in federal court.  Either
party can request a jury trial, a protection that is not available to whistleblowers in many
other contexts.

Under the McCaskill amendment, the rights and remedies provided by the amendment
cannot be waived by any agreement, policy, or condition of employment. With the
exception of arbitration provisions in collective bargaining agreements, pre-dispute
arbitration agreements are neither valid nor enforceable for disputes arising under the
McCaskill amendment.

F. How Does a Potential Whistleblower Decide Whether to Report Concerns
about Improper Use of Stimulus Funds?
   
         
          Whether to report concerns about fraud, waste, abuse or other unlawful violations of
the American Recovery and Reinvestment Act of 2009 can be a very difficult decision for an
employee, as blowing the whistle on an employer's unlawful practices can be a career-
ending move.  However, the McCaskill amendment provides strong whistleblower
protections, and employees who raise concerns can look to a number of resources for
assistance.