Thursday, February 23, 2017

Wrongful Termination and the Internal Investigation in Maryland

Suppose a licensed medical provider inquired into a possible claim for wrongful termination. Further suppose that this former at-will employee questioned certain medical practices and initiated an internal investigation with the employer. After management’s investigation concluded that no misconduct occurred, management decided to terminate the employee.

This blog addresses implications of an internal investigation under Maryland law. Subsequent blogs will address implications under Virginia and District of Columbia law.

“At-will employment” is very common in the United States and means that the employee serves at the pleasure of the employer and may be discharged for any reason or no reason at all – except for an illegal reason. The typical exceptions to “at-will” are government civil service employment, which has certain Constitutional protections; statutes, such as the anti-discrimination laws, which prohibit termination for certain reasons; and contracts, either union contracts or individual contracts, which require a showing of “cause.”

In Maryland, wrongful discharge is another exception. To establish a claim for wrongful discharge, an employee must show that (a) the employee was discharged, (b) the discharge violated a clear mandate of public policy, and (c) there was a nexus between the employee’s conduct and the decision to fire the employee.

The public policy exception is narrow. Maryland courts have found wrongful discharge based on public policy in only two circumstances – when the employee refused to violate the law or the legal rights of a third party, and when the employee exercised a specific legal right or duty. Significantly, and contrary to common assumptions, the public policy exception to the discharge of an at-will employee in Maryland does not provide general protection for “whistleblowing.

Maryland’s Court of Appeals made clear that “internal” whistleblowing would not be protected in Wholey v. Sears Roebuck. Wholey was a former security officer for 24 years with Sears and was promoted to store security manager. In this position, his responsibilities included investigating suspicious behavior and reporting theft by both customers and employees. After observing the store manager engage in theft, he submitted a report to Sears’ district manager for security. The district manager authorized installation of a camera, but the surveillance was later removed by senior Sears officials and the investigation ended. Soon thereafter, Mr. Wholey was terminated.

Mr. Wholey won at trial, but his verdict was reversed on appeal. In a plurality opinion, the Court of Appeals recognized a new public policy exception to the employment at-will doctrine, stating that an employee who was fired for reporting illegal activities to the proper authorities could bring a viable claim under the wrongful discharge doctrine, but denied that protection to employees who made their reports to their chain of command. Thus, Mr. Wholey’s claim ultimately failed because he “merely investigate[d] suspected wrong-doing and discuss[ed] that investigation with co-employees or supervisors.” Consequently, the court created a distinction between external investigations (which sustained a claim for wrongful discharge) and internal reporting (which did not).

The “external/internal reporting dichotomy” remains in effect. However, the Wholey opinion offers additional guidance concerning the viability of a potential wrongful discharge claim. In particular, the Wholey Court stated that “one may have a viable claim of wrongful discharge if terminated for acting pursuant to a legal duty when the employee’s failure to perform that duty could result in potential liability.”

With respect to the medical provider at the beginning of this blog who was terminated after reporting and investigating certain medical practices, the circumstances are different. Our licensed medical provider is protected by the Maryland Health Care Worker Whistleblower Protection Act She was also required to comply with reporting and disclosures requirements under the Code of Maryland regulations (“COMAR”). One requirement was an affirmative duty to disclose certain alleged misconduct. Compare Bleich v. Florence Crittenton Serv., which recognized a wrongful discharge claim for an educator terminated for filing child abuse and neglect report as required under COMAR, with Thompson v. Memorial Hosp., which determined that a legal duty to report misadministration of radiation belonged to the hospital, not the employee-physicist (although internal reports of unsafe handling of radiation are protected by the federal Energy Reorganization Act). Conversely, the Court of Special Appeals has declined to find an exception based on general fiduciary duties.

An “esoteric theory” about acting in the “public good” by investigating criminal activity is insufficient. However, a viable claim for wrongful discharge may exist if an individual can “point to any statute or regulation pertaining to duties” that would hold the individual accountable for failing to investigate or report alleged misconduct.

Maryland’s General Assembly has not shown much interest in expanding whistleblower protections. If it chose, it could adopt the principles of federal statutes such as the Whistleblower Protection Enhancement Act, which protects employees from retaliation for disclosing violations of law, imminent threats to public health or safety, and gross financial mismanagement.

Federal courts have long recognized that whistleblower protections need to protect those who make reports to their supervisors, since that is how most employees normally raise an issue. See here and here. Yet even today, federal courts have split on the issue of whether SEC compliance issues are protected under the Dodd-Frank Act when they are raised only within the affected company. For example, in Asadi v. G.E. Energy (USA), L.L.C., the Fifth Circuit found no protection; in Wallace v. Tesoro Corp., the Fifth Circuit found SOX protection for internal disclosures; in Berman v. Neo@Ogilvy LLC, the Second Circuit adopted SEC guidance in finding internal reports are protected.

Even the United States Chamber of Commerce recognizes internal reporting as its preferred method of whistleblowing and fraud detection. It made these comments to the SEC on implementation of Section 21F of the Securities Exchange Act in December of 2010 (pp. 3-4):
Effective compliance programs rely heavily on internal reporting of potential violations of law and corporate policy to identify instances of non-compliance. These internal reporting mechanisms are cornerstones of effective compliance processes because they permit companies to discover instances of potential wrongdoing, to investigate the underlying facts, and to take remedial actions, including voluntary disclosures to relevant authorities, as the circumstances may warrant…
Protection for internal disclosures has found uneven protection from the courts. Employees who want to raise issues at work, but are afraid of retaliation, can benefit from early advice of legal counsel. Finding the right way to make a disclosure can make the difference between having job protections or not.


This blog was written by Marc Pasekoff.


This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Monday, February 20, 2017

Agreements Must Include OWBPA Language to Waive an Age Discrimination Claim

In the 1980’s, after the Age Discrimination in Employment Act (ADEA) was passed, American businesses realized they could not simply fire their older employees as in the past. Accordingly, older employees found themselves confronted with proposed separation agreements, under which in exchange for their irrevocable resignation and waiver of claims, they would receive their stock options (or some other benefit). Some of those employees sued nonetheless, alleging that they were the victims of age discrimination and their waivers were not “voluntary.”

Although the ADEA and Title VII are found in different parts of the U.S. Code, courts found their goals sufficiently similar to impose on ADEA waivers the requirements that they be signed “knowingly, willfully and free from coercion.” In making that determination, several courts adopted the following factors:

  • the plaintiff’s education and business experience,
  • the amount of time the plaintiff had possession of or access to the agreement before signing it
  • the role of plaintiff in deciding the terms of the agreement,
  • the clarity of the agreement,
  • whether the plaintiff was represented by or consulted with an attorney, and
  • whether the consideration given in exchange for the waiver exceeds employee benefits to which the employee was already entitled by contract or law.
EEOC v. Am. Express Publ’g Corp., 681 F. Supp. 216, 219 (S.D.N.Y. 1988), quoted in Bormann v. AT&T Commc’ns, Inc., 875 F.2d 399, 403 (2d Cir. 1989). The court in Bormann added that it would look at “whether an employer encourages or discourages an employee to consult an attorney . . . and whether the employee had a fair opportunity to do so.”

In 1990, Congress amended the ADEA by adding the Older Workers Benefit Protection Act (OWBPA), which establishes specific requirements for a “knowing and voluntary” release of ADEA claims. This statute was designed to protect the rights and benefits of older workers through a strict, unqualified statutory stricture on waivers. Specifically, the OWBPA, adopting the growing number of judicial decisions, requires satisfaction of the following seven factors for a waiver of age discrimination claims to be considered “knowing and voluntary”:

  1. A waiver must be written in a manner that can be clearly understood.
  2. A waiver must specifically refer to rights or claims arising under the ADEA.
  3. A waiver must advise the employee in writing to consult an attorney before accepting the agreement.
  4. A waiver must provide the employee with at least 21 days to consider the employer’s final offer.
  5. A waiver must give an employee seven days to revoke his or her signature.
  6. A waiver must not include rights and claims that may arise after the date on which the waiver is executed.
  7. A waiver must be supported by consideration in additional to that to which the employee already is entitled.
Items 3-4 must be included in the waiver agreement. Even when a waiver complies with these seven requirements, a waiver of age claims will be invalid and unenforceable if an employer used fraud, undue influence, or other improper conduct to coerce the employee into signing it or it if contains a material mistake, omission, or misstatement.

Prior to October 2016, the U.S. Equal Employment Opportunity Commission (EEOC or Commission) held that the protections of the OWBPA are only triggered when an employee raises an age discrimination claim before signing a waiver/release agreement. Thus, if a federal employee signed a waiver agreement for an EEO complaint alleging race discrimination, that waiver would preclude claims of age discrimination even if the agreement did not include the OWBPA language cited above.

In Hester S. v. EEOC, however, the Commission overruled that interpretation of the OWBPA. Specifically, the Commission held that “the OWBPA applies to waivers of ADEA rights or claims regardless of whether the rights or claims were raised before the execution of the waiver agreement.” In Hester S., the complainant initiated contact with an EEO counselor in April 2011, alleging discrimination on the basis of disability and in reprisal for protected EEO activity when she was issued a performance improvement plan and denied a reasonable accommodation. In June 2011, complainant expanded her bases to include race, national origin, sex, and age. In May 2011, complainant was presented with a settlement agreement, which she signed. Amongst other provisions, the settlement agreement stated:

(5) The Employee hereby agrees to accept the Agency’s actions detailed [above] in full resolution of any pending or anticipated claims or other rights of actions that occurred on or before the date of the signing of this Agreement . . . .

. . .

(7) The Employee represents that at the time of the signing of this Agreement, the Employee has no pending claims against the Agency, including but not limited to EEO complaints.

In August 2011 (almost three months after complainant signed the settlement agreement), complainant filed a formal EEO complaint alleging that the agency harassed and discriminated against her on the bases of race, sex, national origin, disability, age, and in reprisal for prior protected EEO activity arising under the Rehabilitation Act when the agency failed to provide her with a reasonable accommodation for her disability. In its final decision, the agency dismissed complainant’s complaint on the ground, among others, that it failed to state a claim because it was resolved by a settlement agreement.

On review, the Commission determined that, indeed, the settlement agreement constituted a waiver or release of complainant’s August 2011 EEO complaint and settled complainant’s claim that she was subjected to discrimination on the bases of race, national origin, sex, disability, and in reprisal for EEO activity—complainant’s non-age claims. Because the OWBPA governs waivers or releases of ADEA claims, however, the Commission made it clear that age claims cannot be validly waived unless the requirements of the OWBPA have been met—even if the age claim purportedly waived by a release was not filed until after the execution of the waiver. Thus, despite the agency’s assertion that complainant knowingly and voluntarily signed the agreement, because the complainant was not (1) advised in writing to consult with an attorney prior to executing the agreement, (2) given a period of at least 21 days within which to consider the agreement, and (3) given a seven-day period in which she could revoke the agreement after its execution, the Commission held that the waiver was not effective to waive complainant’s age discrimination claims and directed the agency to reinstate these claims.

Given the EEOC’s holding in Hester S., an agency’s failure to comply with the OWBPA’s stringent waiver safeguards will now void a settlement agreement, with regard to the ADEA claims, irrespective of whether the employee had filed an ADEA claim at the time the agreement was effected. This change in Commission precedent is consistent with the congressional purpose of the OWBPA: to prohibit employers from discriminating against individuals age 40 and older because of age—no exceptions.

By: Aaron Herreras


This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Friday, February 3, 2017

The Angst of Disclaimed Workers May Be Lifting

In an earlier blog post So Where Do I Fit In? The Angst of the Worker No One Wants to Claim, we discussed the dilemma that drivers for Uber and Lyft are facing when those companies classify them as independent contractors, rather than employees. This classification results in the drivers not being reimbursed for their business expenses, and not being paid at least minimum wage, overtime, or benefits. In an analogous but legally distinct context, courts grapple with whether workers can be jointly employed by two or more employers for purposes of paying minimum wages and overtime. Increasing numbers of workers are employed by temporary staffing agencies or subcontractors, which then provide these workers to other entities. So what happens when a worker works 32 hours for one entity and 16 for another––is she entitled to overtime? And if so, who is responsible for paying it? Not surprisingly, the lack of traditional identifiers in the employment relationship has led to some workers falling through the cracks of the employment laws. Fortunately, though, the Fourth Circuit has issued some recent rulings which recognize the modern-day realities of these workers, and which provide the legal protections they deserve.

On January 25, 2017, the Fourth Circuit issued two rulings in cases involving issues of unpaid overtime under the Fair Labor Standards Act (“FSLA”): Salinas. v. Commercial Interiors, Inc., and Hall v. DirectTV, LLC. In Salinas, the plaintiff workers were directly employed by J.I. General Contractors (“J.I.”), a framing and drywall installation subcontractor. J.I. worked nearly exclusively for Commercial Interiors, Inc. (“Commercial”). The plaintiffs sued both J.I. and Commercial under the FLSA and other state wage laws, claiming that the hours they worked for both entities should be aggregated to determine their eligibility for overtime under the FLSA.

The Fourth Circuit began its analysis with a look at the broad and remedial purposes of the FLSA, which is “to combat the pervasive ‘evils and dangers resulting from wages too low to buy the bare necessities of life and from long hours of work injurious to health.’” Further, “Congress intended the FLSA…‘to protect the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others.’” In order to achieve the FLSA’s “‘remedial and humanitarian purpose,’” Congress very broadly defined “employ” to mean “suffer or permit to work;” “employee” as “any individual employed by an employer;” and “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.”

While the FLSA does not specifically reference “joint employment,” the Department of Labor’s regulations implementing the FLSA recognize that “‘[a] single individual may stand in the relation of an employee to two or more employers at the same time under the [FLSA].” The regulations distinguish between “separate and distinct employment” and “joint employment.” “Separate employment exists when ‘all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely dissociated with respect to the’ individual’s employment.” “[J]oint employment exists when ‘the facts establish…that employment by one employer is not completely dissociated from employment by the other employer[].’” The regulations state that, “‘joint employers are responsible, both individually and jointly, for compliance with all applicable provisions of the [FLSA], including the overtime provisions...’ Accordingly, the hours an individual works for each joint employer in a single workweek must be aggregated to determine whether and to what extent the individual must be paid overtime to comply with the FLSA.”

Explaining that courts across the country have had difficulty developing coherent and consistently-applied tests for distinguishing between separate and joint employment, and recognizing that the Fourth Circuit itself had not identified specific factors courts should consider in determining whether a joint employment relationship exists, the Fourth Circuit set out to do so. The court articulated a two-step inquiry, the first of which involves an analysis of the relationship between the putative joint employers. The basic question to be resolved at the first step of the inquiry is whether “the persons or entities share, agree to allocate responsibility for, or otherwise codetermine-formally or informally, directly or indirectly-the essential terms and conditions of the worker’s employment.” The Fourth Circuit identified six non-exhaustive factors that courts should consider in this first step:
(1) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;

(2) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to—directly or indirectly—hire or fire the worker or modify the terms or conditions of the worker’s employment;

(3) The degree of permanency and duration of the relationship between the putative joint employers;

(4) Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;

(5) Whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently, or in connection with one another; and

(6) Whether, formally or a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation insurance; paying payroll taxes; or providing the facilities, equipment, tools, or materials necessary to complete the work.
Applying these factors, the Fourth Circuit concluded that the plaintiffs were jointly employed by J.I. and Commercial:
(1) Commercial not only supervised the plaintiffs’ work, but it also required the plaintiffs to hold themselves out as Commercial employees by wearing Commercial-branded clothing. The Fourth Circuit rejected Commercial’s argument that its supervision of the plaintiffs amounted only to “quality control,” but acknowledged “that an entity does not become a joint employer by engaging in the oversight necessary to ensure that a contractor’s services meet standards of quality and timeliness.” “But in this case, Commercial’s supervision of Plaintiffs went beyond ‘double-check[ing] to verify that the task was done properly.’” Similarly, the Fourth Circuit rejected Commercial’s contention that its foreman did not supervise the plaintiffs because the foreman “generally spoke only to J.I.’s supervisors and did not speak to Plaintiffs directly. The FLSA provides that indirect control is sufficient to render an entity an ‘employer’ under the statute.” “[S]upervision is present whether orders are communicated directly to the laborer or indirectly through the contractor.”

(2) While J.I was generally responsible for hiring and firing its employees, Commercial dictated the plaintiffs’ hours and occasionally required them to work additional hours or on additional days.

(3) and (4) The overwhelming majority of J.I.’s contracts were with Commercial, and the plaintiffs worked almost exclusively on Commercial jobsites.

(5) The plaintiffs worked on premises controlled by Commercial, and Commercial required them to sign in an out of the jobsite with Commercial foreman and supervised their actions while on the jobsite.

(6) Commercial supplied plaintiffs with all the tools, materials, and equipment necessary to perform their work.
In Hall, the Fourth Circuit similarly held that the plaintiffs, who installed and repaired DIRECTV equipment, were jointly employed by DIRECTV and DirectSat (an intermediary provider). “DIRECTV compelled Plaintiffs to obtain their work schedules and job assignments through DIRECTV’s centralized system and to follow ‘particularized methods and standards of installation to assure DIRECTV’s equipment is installed according to the dictates of DIRECTV’s policies and procedures.’” Additionally, “although Plaintiffs’ direct employers had formal firing authority, DIRECTV used its centralized work-assignment system to effectively terminate technicians by ceasing to assign them work.”

The second step of the analysis involves determining whether “the two entities’ combined influence over the terms and conditions of the worker’s employment render the worker an employee as opposed to an independent contractor.” At this stage of the analysis, a court considers “the ‘economic realities’ of the relationship between the worker and the putative employer’ or employers, in the event the worker is jointly employed. If a worker is not economically dependent on a putative employer, in other words, if a “worker[‘s] profit or loss depends upon his own creativity, ingenuity, and skill,” the worker “is an independent contractor outside of the FLSA’s scope.”

In United States v. Silk, the Supreme Court articulated six factors for determining whether a worker constitutes an employee or independent contractor: “‘(1) the degree of control that the putative employer has over the manner in which the work is performed; (2) the worker’s opportunities for profit or loss dependent on his managerial skill; (3) the worker’s investment in equipment or materials, or his employment of other workers; (4) the degree of skill required for the work; (5) the permanence of the working relationship; and (6) the degree to which the services rendered are an integral part of the putative employer’s business.’” When workers are deemed to have “one employment” with two or more entities under the first step of the analysis, these factors must be analyzed from the perspective of employment in the aggregate. For example, in Salinas, the court stated that, “with regard to the first factor, due to Commercial’s daily supervision of Plaintiffs, Commercial and J.I.–as Plaintiffs’ ‘one employer’–exercised greater control over Plaintiffs’ work than J.I. exercised alone.” The court concluded that the plaintiffs were employees (as opposed to independent contractors), based on their entire employment for both J.I. and Commercial.

The Fourth Circuit appears to have become a benevolent watchdog in FLSA claims in the joint employment context, making sure that employers do not escape liability for such claims by disclaiming those persons who toil for their benefit.


Written by Valerie A. Chastain.

This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Wednesday, January 25, 2017

What is a Suitability Determination?

No matter what kind of job you do, if you’re working for the federal government in a competitive service position, you will have to be reviewed for “suitability”. What that means in practice is that OPM or your agency will use your application form, interviews, pre-employment inquiries, investigative data forms, and personal subject interviews to discover whether you have any derogatory information that might make your hire harmful to the “integrity or efficiency of the federal service.”

5 C.F.R. §731 contains the regulations governing suitability for federal employment. It lists eight specific factors that may be used in making a suitability determination:
(1) Misconduct or negligence in employment;

(2) Criminal or dishonest conduct;

(3) Material, intentional false statement, or deception or fraud in examination or appointment;

(4) Refusal to furnish testimony as required by §5.4 of this chapter;

(5) Alcohol abuse, without evidence of substantial rehabilitation, of a nature and duration that suggests that the applicant or appointee would be prevented from performing the duties of the position in question, or would constitute a direct threat to the property or safety of the applicant or appointee or others;

(6) Illegal use of narcotics, drugs, or other controlled substances without evidence of substantial rehabilitation;

(7) Knowing and willful engagement in acts or activities designed to overthrow the U.S. Government by force; and

(8) Any statutory or regulatory bar which prevents the lawful employment of the person involved in the position in question.

5 C.F.R. § 731.202(b). These are the only factors that may be considered in making a suitability determination. However, the regulations also offer a list of seven considerations that “must” be considered if the agency finds them to be pertinent:
(1) The nature of the position for which the person is applying or in which the person is employed;

(2) The nature and seriousness of the conduct;

(3) The circumstances surrounding the conduct;

(4) The recency of the conduct;

(5) The age of the person involved at the time of the conduct;

(6) Contributing societal conditions; and

(7) The absence or presence of rehabilitation or efforts toward rehabilitation.

5 C.F.R. § 731.202(c). The standard for determining suitability is simply whether “the action will protect the integrity or promote the efficiency of the service.” 5 C.F.R. § 731.201. That is, OPM or the agency may determine a new employee, i.e., one who has worked for the government for less than a year, is “unsuitable,” if they can show that doing so “will protect the integrity or promote the efficiency of the service.” 5 C.F.R. § 731.201.

OPM has developed a chart for evaluating suitability for new employees. At the top, and requiring referral to an adjudicator, is “Any evidence of dishonesty or fraud in the competitive examination or appointment process (such as falsification of application).” The chart below is divided into Major and Substantial Issues, for which referral is required if within the last three years; Moderate Issues, for which referral is required when there are two or more issues; and Minor Issues, for which referral is required if there are three or more within the last three years. This referral process is straightforward.

Agencies can begin suitability considerations at any point in the hiring process, although the investigation does not typically begin until after the employee is hired, and a determination under 5 C.F.R. § 731 must be completed within the first year of a federal employee’s employment.

If the agency (or OPM) determines to take a suitability action under 5 C.F.R. § 731, it may remove the new hire from federal employment or even debar them for up to three years. However, a person subject to a suitability action has procedural rights. The Agency must give reasonable notice in writing, stating the specific reasons for the decision. It must give notice that the employee has a right to review “the materials relied upon”; to an attorney; and to time to prepare a response. The response must be in writing and may be accompanied by documents and affidavit in support. The agency must retain the individual in pay status during the response time.

Applicants and new hires may appeal an unfavorable suitability determination to the Merit Systems Protection Board, which will ensure that the procedural requirements (notice, answer, etc.) have been met.

Employees who have passed their probationary period are also subject to the suitability procedures. Prior to 2015, OPM’s suitability regulations had held that non-probationary employees whom OPM removed (or ordered an agency to remove) on suitability grounds were not entitled to appeal their removal to the Merit Systems Protection Board. In Archuleta v. Hopper, the U.S. Court of Appeals for the Federal Circuit held that OPM could not issue regulations that modified a statute. Because non-probationary employees are permitted to appeal their removal to the MSPB, the Court rejected OPM’s regulation. As the result, a non-probationary employee who is removed on suitability grounds may appeal that removal, and not just the procedures, to the MSPB.

This blog was written by Mary Kuntz.

This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Thursday, January 19, 2017

Important New Rules for Federal Employees Created by the National Defense Authorization Act for Fiscal Year 2017

Each fiscal year, for the past 50 years, Congress has passed a National Defense Authorization Act (“NDAA”). Primarily a budgeting and expenditures authority for the U.S. Department of Defense, the Act also often serves as a vehicle for numerous other provisions that have wide-ranging impact on all aspects of the federal government. The following is a concise list of changes in Title XI of the 2017 NDAA, which contains new provisions that concern federal employees.

1.  The two-year limitation on noncompetitive appointments for military spouses is eliminated. This means that a relocating spouse can now serve in a noncompetitive appointment until the end of his or her spouse’s service.

2.  Select employees—those serving under a time-limited appointment in the competitive service for a domestic defense industrial base facility or the Major Range and Test Facilities Base—are now eligible to compete for permanent positions in specialized circumstances. Additionally, benefits for such employees will be comparable to those employees who are not serving under time-limited appointments in the same facilities.

3.  There is a one-year extension for: 1) (from 2017 to 2018) the authority to grant allowances, benefits, and gratuities to civilian employees in combat zones; and 2) (from 2016 to 2017) the authority to waive the annual limitation on premium pay and the aggregate limitation on pay for overseas civilian employees.

4.  An advance of basic pay for up to four pay periods is permitted for employees relocated to an agency position outside of their commuting area.

5.  Time-limited appointed employees may now compete for permanent appointments at any federal agency.

6.  Official personnel files of former federal employees must be reviewed when they are being considered for rehire into the competitive or excepted service. Specifically, the appointing authority is now required to review and consider merit-based information relating to such employee’s former period(s) of service, e.g., official personnel actions, employee performance ratings, and disciplinary actions, if any, prior to making a determination with respect to the appointment or reinstatement of such employee.

7. The Office of Personnel Management (“OPM”) and all other agencies have 270 days to reform their administrative leave policies and procedures to be consistent with the following significant changes:
a. Administrative leave is now capped at 10 workdays per calendar year.

b. Investigative leave can be granted in 30-day increments (for a total of 90 days) if an investigation could not be completed within the initial 10 days of administrative leave. If an investigative entity certifies that additional time still is needed to complete the investigation, an agency can further extend this period for up to 30 days at a time. No extensions are permitted after the investigation is completed.

c. Notice leave cannot exceed the duration of the notice period.

d. Both investigative and notice leave are subjected to greater scrutiny; they are reserved only for occasions when the employee’s continued presence in the workplace would (i) pose a threat to the employee or others, (ii) result in the destruction of evidence relevant to an investigation, (iii) result in loss of or damage to Government property or (iv) otherwise jeopardize legitimate Government interests. Additionally, agencies must first consider whether other options, such as telework or a reassignment, would be viable.

e. Agencies must provide the employee with a written explanation of whether the employee was placed in investigative or notice leave and the limitations of the leave placement.

f. Placement on investigative leave in excess of 70 days will constitute a personnel action under § 2302(b)(8), (9) for which the employee may seek relief before the Office of Special Counsel.

g. Excused absences should still be granted to federal employees who cannot travel to work sites because of safety issues, weather issues, or other “acts of God.”
8.  Permanent notations must now be made in the employee’s official personnel file (“OPF”) if he/she was subject to an adverse finding pursuant to an investigation (by an Inspector General or an adverse personnel action as a result of performance, misconduct, or for such cause as will promote the efficiency of the service), even if he/she resigned prior to resolution of such investigation. However, the employee will be afforded an opportunity to respond to the adverse finding, and he/she may appeal the agency’s decision to make the permanent notation to the Merit Systems Protection Board (“MSPB”).
a. If an employee appeals the agency’s decision to the MPSB, the agency will notate in the employee’s OPF that an appeal disputing the notation is pending.

b. If the agency prevails, the agency must remove the pending notation within two weeks of the MSPB’s decision.

c. If the employee prevails, the agency must remove all notations of the adverse finding within two weeks of the MSPB’s decision.
The new year promises many changes for all employees, whether federal or private. This firm will be carefully monitoring for forthcoming developments that may impact our clients. Stay tuned.


This blog was written by Aaron Herreras and Nina Ren.

This blog is provided to our readers for informational purposes only.  It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Tuesday, January 17, 2017

Congress Seeks to Curb Federal Employees’ Rights

A large contingent of the 115th United States Congress, which convened on January 3, 2017, has made no secret that it plans to take steps to reduce employment protections for federal employees over the coming months.

First, the House of Representatives revived a 19th century rule, first adopted in 1876, that was dropped from its procedures over 30 years ago.  This rule, called the Holman Rule, gives each Representative the power to target the funding of specific government agencies and their employees by proposing an amendment to any appropriations bill to slash funding to particular federal program or to entirely eliminate certain positions within agencies.

While the Holman Rule originally was on the books, Congress used it sparingly.  However, in today’s increasingly partisan environment, there are concerns that Representatives may use the Rule to make civil servants and public programs susceptible to political influence by allowing elected officials to remove funding from departments that they disapprove of.  In this scenario, certain non-partisan federal employees, for example, those working on climate change, could find themselves in the cross-hairs of Congress’ political whims.

Next, there are reports that Representative Todd Rokita will reintroduce his bill from last October, called the Promote Accountability and Government Efficiency (“PAGE”) Act. If passed, this law would make all new federal hires at-will employees and allow agencies to immediately suspend or remove current civil servants without warning and – possibly – without the right to appeal.

Unlike their counterparts in the private sector who are mostly employed “at-will” – meaning the terms and conditions of those workers’ employment can be changed at the will of the employer for no reason – the majority of full-time federal government workers are protected by civil service laws, which guard them from unreasonable and unfair terminations and demotions.

Currently, civil servants, through the Due Process Clause of the 5th Amendment to the Constitution and various federal laws, must be given notice and an opportunity to be heard before the government can fire them, reduce their pay, or take other adverse employment actions.  Groups representing federal employees are concerned that Representative Rokita and other lawmakers want to make it easier to bypass these laws and fire competent civil servants in order to reduce the footprint of the federal government.


It is not clear exactly how Representatives could legally get around the nation’s civil service laws with either the Holman Rule or the PAGE Act to remove a particular civil servant, but federal employees should be aware that Congress has set its sights on reducing workers’ employment protections and contact an attorney at the first sign of trouble.

This blog was written by Sarah Martin.

This blog is provided to our readers for informational purposes only.  It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Friday, January 13, 2017

KCNF files Supreme Court amicus brief supporting WPEA claims for EEO retaliation

On September 6, 2016, the Ninth Circuit U.S. Court of Appeals affirmed the dismissal of Leslie Kerr’s whistleblower retaliation claim against the Department of the Interior. The court held that federal employees who comply with the administrative exhaustion requirements governing EEO claims in mixed cases, cannot include in their subsequent district court suits claims alleging reprisal arising under the Whistleblower Protection Enhancement Act (WPEA).   The court recognized that its holding is in conflict with Wells v. Shalala, 228 F.3d 1137 (10th Cir. 2000), setting up a circuit split that only the Supreme Court can resolve.

Indeed, Leslie Kerr has petitioned the Supreme Court to grant review of the Ninth Circuit’s decision. The Government Accountability Project and Felecia Redding filed an amicus brief in support of Ms. Kerr’s petition.  KCNF, which represents Ms. Redding, drafted the brief for her and GAP.

Leslie Kerr worked for the Fish and Wildlife Service (FWS or the Agency) as director of the Kodiak National Wildlife Refuge (the photo shows protected auklets).  In the early 2000’s, Kerr raised concerns about alcohol abuse by other employees at the Refuge. In 2005, her supervisor asked her, “This is going to sound sexist as hell, but couldn’t you learn to be more feminine?” The supervisor gave Kerr a low performance rating, and Kerr complained. The supervisor transferred her, and she refused the transfer. The agency fired her for refusing the transfer, and she filed an EEO complaint alleging that the transfer and removal were discriminatory.  Although it was not a basis of her EEO complaint, Kerr believed that her disclosures about alcohol abuse were also a factor in the decision to fire her.

The Agency’s Office of Civil Rights rejected Kerr’s complaint, and she filed suit in the U.S. District Court in Alaska. That court dismissed her WPEA claims and tried her EEO claims to a jury.  The jury found in favor of the Agency, and Kerr appealed the dismissal of her WPEA claims. The Ninth Circuit’s decision affirming the dismissal is now pending before the Supreme Court.
On behalf of the GAP and Ms. Redding, we argued to the Supreme Court that the “mixed case” statute, 5 U.S.C. § 7702(f), permits federal employees to file a lawsuit raising both discrimination and civil service claims after exhausting through only one agency process.  However, the decision below flies in the face of these statutory provisions and requires victims of retaliation to exhaust at least two administrative procedures to give the district court jurisdiction of all their claims.

As the Supreme Court has recognized, the public’s interest in protecting from reprisals employees who file complaints allowed by statute is so strong that the Supreme Court has imputed such protection into laws that have no words creating it. See, Jackson v. Birmingham Board of Education, 544 U.S. 167 (2005) (Title IX); CBOCS West, Inc. v. Humphries, 553 U.S. 442, 128 S. Ct. 1951 (2008) (42 U.S.C. § 1981); Gomez-Perez v. Potter, 553 U.S. 474 (2008) (ADEA).  The Ninth Circuit erred when it held that § 7702(a)(2) does not authorize Kerr to bring her Whistleblower Protection Act (WPA) claim directly from the EEO office to district court.

The Ninth Circuit was primarily concerned with the “practical import” of the Tenth’s Circuit’s interpretation of § 7702 in Wells, in particular the additional number of cases that could be brought to district court.  This “practical import” argument, however, places a higher priority on protecting the courts from having to decide more cases than on protecting victims of whistleblower reprisals. That is docket control, and it is an impermissible basis upon which to decline jurisdiction granted by Congress. The number of cases that can be filed is irrelevant to the question of jurisdiction. The Supreme Court has reaffirmed that “a federal court’s obligation to hear and decide cases within its jurisdiction is virtually unflagging.”  Congress emphasized at 5 U.S.C. § 7702(e)(1) that an employee has a right to bring a civil action in a mixed case after 120 days of agency processing “[n]otwithstanding any other provision of law[.]” In that statute, Congress declared that there are no other barriers to federal court jurisdiction, yet the Ninth Circuit in Kerr has erected such a barrier based primarily on its perception of “practical import.”

The requirement that an employee exhaust mixed-case EEO retaliation claims through the Office of Special Counsel (OSC) and MSPB is particularly ironic because OSC’s own policy states that it “will normally avoid” investigating such claims because employees can raise them separately in the agency EEO process. See 5 C.F.R. § 1810.1. Also, the MSPB has been less than consistent about applying the WPEA to protect EEO concerns.

Other circuit courts that have addressed this issue have concluded that district courts possess juris-diction to decide non-discrimination claims in mixed cases when agencies fail to meet the time limits in § 7702(e)(1)(B).  Employees may bring “mixed cases” to district court, even if the original administrative EEO complaint did not expressly articulate the legal theory underlying the “mixed case.” Generally, there is no requirement that a complaint set out the legal theory that permits relief for the facts alleged.

It is critical that employees know that they protected when they disclose wrongdoing, and that this protection is extremely broad and will not be narrowed retroactively by future MSPB or court opinions. Without that assurance, whistleblowers will hesitate to come forward. The interest at stake is as much the public’s interest in receiving allegations of wrongdoing as it is protecting employees who disseminate it. “Congress passed the whistleblower statute precisely because it did not trust agencies to regulate whistle-blowers within their ranks.”

The decision in Kerr runs counter to the administrative economy of the mixed case statute, which allows whistleblowers to preserve all of their claims by using just one of the available agency proceedings. It also runs counter to the remedial purpose of the 2012 WPEA, which explicitly extends protection both to “any disclosure” of violations of law and federal employees’ participation in official proceedings. Finally, it places federal employees in the dilemma of having to waive all of their civil service remedies (including their WPA remedies), just to bring their retaliation claim to district court.

The Amicus Brief urges the Supreme Court to grant Kerr’s petition and reverse the decision of the Ninth Circuit.


Richard Renner authored the amicus brief discussed in this blog.

This blog is provided to our readers for informational purposes only.  It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.