Employment Law Daily Audio recording discredits employer’s discharge justification of whistleblowing employee
Thursday, May 26, 2016

Audio recording discredits employer’s discharge justification of whistleblowing employee

By Brandi O. Brown, J.D. An administrative law judge’s decision in favor of a whistleblowing employee was supported by substantial evidence, ruled a divided Fourth Circuit in an unpublished decision, concluding that the ALJ properly applied the correct standard for causation under Sarbanes-Oxley, i.e., that the employee’s protected activity “contributed to” her discharge. Critical to this conclusion was the court’s finding that the employer’s explanation for her discharge was not true—the ALJ had determined that the employee’s audio recording of a meeting demonstrated that she remained calm and did not take inappropriate or threatening actions. Judge Agee dissented (Deltek, Inc. v. Department of Labor, May 20, 2016, Harris, P.). Raised fraud concerns. Shortly into her tenure as a financial analyst for Deltek, Inc. the employee came to suspect that other employees were committing fraud by generating baseless invoice disputes. She raised the issue with her supervisor and later in letters to the employer’s audit committee and general counsel. The general counsel asked her to gather information and when she began to suspect that other employees were destroying documents, she emailed some of them to her personal email account. She took medical leave soon thereafter. HR agreed that she would be able to terminate her leave with 24 hours’ notice. While on leave she filed an OSHA complaint, alleging retaliation for whistleblowing in violation of the Sarbanes-Oxley Act. During this time her attorney and the employer began to negotiate a settlement that would result in her separation from the employer. In the meantime, however, she became concerned about her employment status after her employer reversed a paycheck deposit and she received a COBRA notice. Meeting then termination. After giving notice, the employee returned to work and went straight to HR. Unbeknownst to the employer she was recording the events that took place. She met with HR and the employer’s attorney and was told that although she still had a job, she could not return to work that day. She left and met up with her spouse in the parking lot. Ultimately, the employee was fired for allegedly behaving in a “confrontational” and “disruptive” manner during that meeting and in the parking lot. Her Sarbanes-Oxley Act claims went before an ALJ who conducted a 12-day hearing. The ALJ heard testimony and reviewed evidence, including the employee’s audio recording. The ALJ credited the employee’s account, deemed the employer’s explanation for her termination pretextual, and found the employer liable. The ALJ assessed damages against the employer, including an award of front pay. The Department of Labor’s Administrative Review Board (ARB) affirmed and the employer appealed the matter to the Fourth Circuit. Substantial evidence supporting causation. Noting that its review of the ARB decision was limited, the appeals court affirmed. The court had little trouble concluding that the employee had both a subjective and objective belief that the conduct she reported violated the Sarbanes-Oxley Act and, therefore, that her letter and OSHA complaints were protected activity. Similarly the court rejected the employer’s argument with respect to causation. All the employee had to do was show that her protected activity “contributed to” her discharge, a standard that was “a ‘broad and forgiving’ one” according to the court. The ALJ’s key finding in this regard was that the employer’s explanation for the employee's discharge was “not true.” This conclusion was made possible by the audio recording, which the ALJ concluded directly contradicted the employer’s contention that the employee had behaved in a “confrontational” manner. The court reached the same conclusion with respect to the alleged “disruption” caused by the employee and her husband’s conversation in the parking lot—there was no evidence that they actually caused any disruption. The ALJ’s finding, the court concluded, was supported by substantial evidence and was entitled to deference. Along with the temporal proximity of the decision, which itself was sufficient to raise an inference that the employee’s protected activity contributed to the termination decision; there was no reason for the appeals court to “disturb” the ALJ’s determination. Damages award affirmed. Although the employer had argued before the ALJ that it would have fired the employee if it had known that she emailed documents to her shared, private email account, the court noted that the ALJ had found that the employee only forwarded documents relevant to her whistleblowing reports and that the employer’s general counsel had directed her to collect information supporting her complaint. The court agreed that her effort to protect relevant documents from destruction would not have justified her discharge. With respect to the audio recording, the ALJ had cited the employer’s failure to provide any company policy or law that prohibited such recordings. The court also affirmed the award of four years of front pay, rejecting the employer’s argument that it was “unduly speculative.” The employee had requested ten years of front pay and was given four, with the ALJ finding that she could obtain a similar job in four years’ time if she obtained a degree in that time. The employee had been unable to secure a similar job without a degree. Dissent. Judge Agee dissented, arguing that causation had not been established because the “mere circumstance that protected activity precedes termination” does not provide proof of a causal connection. Moreover, Judge Agee argued, the conclusion that the employer’s reason for termination was pretextual did not plug what he saw as a gaping hole in the prima facie case. The dissent also faulted the front pay award as lacking substantial evidentiary support and argued that it created a “windfall” in the employee’s favor.

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